Jon
Yarbrough's
"Employment
Law Corner"
courtesy of the
Asheville Citizen-Times
The
Employment Law Corner is the property
of the Asheville
Citizen-Times to whom we extend our thanks for allowing us to
republish the article.
November 7, 2005:
"Amendments
affect employers’ right
to deduct from wages"
By Jonathan
W. Yarbrough
Amendments to the N.C. Wage and Hour Act affect an employer’s
rights and obligations with respect to deductions from wages. The
amendments were signed into law by Gov. Mike Easley and became
effective Oct. 1.
The Wage and Hour Act always required written authorization for
certain deductions from wages. However, the statute was relatively
general. The amendments are much more specific. Here are the
highlights:
Deductions from wages
• When the amount or rate of deduction is known and agreed upon in
advance, the written authorization to deduct from wages must (1) have
been signed on or before the payday in which the deductions were to be
made; (2) include the reason for the deduction; and (3) state the
actual dollar amount or percentage of wages to be deducted.
• When the amount or rate of deduction is not known and agreed upon
in advance, the authorization must include the same information as
above except for the dollar amount or percentage of wages to be
deducted. Before any deductions can be made under these circumstances,
the employee must receive advance written notice of the amount to be
deducted, written notice of the right to withdraw the authorization
and be given a reasonable opportunity to withdraw the authorization in
writing.
• During a week in which overtime is not worked, the employer may
reduce the employee’s wages to the minimum wage level.
• During a week in which overtime is worked, the employer may
reduce “straight time” wages to the minimum wage level but may not
reduce overtime.
• For deductions resulting from cash shortages, inventory shortages
or loss or damage to the employer’s property, the employer may make
deductions from wages upon giving seven days’ notice to the employee
(in addition to complying with the restrictions described above). If
employment is terminated, this type of deduction may be made without
regard to the seven-day notice period. If the employee is charged,
indicted or arrested in connection with such a shortage, the employer
may make deductions without written authorization, but the amount of
the deductions is limited as set forth above. If the employee is
acquitted, the employer must reimburse the employee. The statute does
not limit the employer’s right to bring a civil action against the
employee for any such shortages.
• Overpayment of wages due to an employer’s bona fide mistake is
considered prepayment of wages and may be withheld or deducted from
subsequent wages without regard to the restrictions described above.
(This also applies to advances of wages to the employee or to a third
party at the employee’s request; and to the principal amount of
employer loans to the employee.) However, if the employer wishes to
charge interest or other penalty, deductions for the interest/penalty
are subject to the restrictions.
Changes to amount of wages
The amendments also require that written notice of changes in wages
be provided at least 24 hours before the changes take effect. The old
version of the statute did not provide a specific deadline. (As with
the original version of this statute, increases in wages may be made
retroactively.) Employers beware: this requirement of prior notice
also covers changes in bonus-calculation formulas and production
standards that are less favorable to the employee — a number of North
Carolina employers have been “burned” on this issue, even under the
old statute.
The changes are codified at N.C. Gen. Stat. §§95-25.8, 95-25.11,
and 95-25.13(3).
Jonathan W. Yarbrough is a member of the law firm of Constangy,
Brooks & Smith LLC, which is dedicated to representing management
exclusively in all aspects of the employment relationship. Contact
Yarbrough at 277-5137 or
jyarbrough@constangy.com
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