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Summary of differences between federal and state regulations
Federal regulations restrict the types of deductions that can be made from an employee’s wages or salary. Deductions can be made in certain cases, but the legality often depends on the nature and purpose of the deductions, as well as the status of the employee as exempt or non-exempt.
Under Oklahoma law, deductions can be legal, depending upon the circumstances. Employers must sign a written agreement with employees in order to make legal deductions from employees’ wages unless deductions are made pursuant to express statutory authority, such as state and federal tax withholdings and FICA, or pursuant to a prior valid final judgment by an employer against an employee.
It is permissible for an employer and employee to voluntarily enter into a payroll deduction agreement for the following purposes:
- To allow the employee to repay a loan or advance which the employer made to the employee during the course of and within the scope of employment, or to allow for recovery of overpayment;
- To compensate the employer for the value of the employer’s merchandise or uniforms purchased by the employee;
- To provide payment for medical, accident, disability, or retirement benefits, or insurance premiums, not including workers’ compensation or unemployment;
- To provide for contributions to a deferred compensation plan or other investment plan provided by the employer as a benefit to the employee;
- To compensate the employer for breakage or loss of merchandise, inventory shortage, or cash shortage caused by the employee; where the employee was the sole party responsible for the cash or items damaged or lost, at the time the damage or loss occurred.
Any payroll deduction agreement must be in writing, and signed by the employer and employee.
An employer can not deduct from an employee’s wages costs associated for a medical exam required by the employer as a condition of employment.
Federal
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Regulations
For non-exempt employees:
29 CFR Part 531, Wage Payments under The Fair Labor Standards Act of 1938
For exempt employees:
29 CFR Part 541, Subpart G, Salary Requirements