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deducting used but "unearned" vacation from final paycheck
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deducting used but "unearned" vacation from final paycheck
Discuss employment-law issues such as family leave, overtime, disabilities law, harassment, immigration and termination.
I know that allowing an employee to use vacation time before it is accrued is, in effect, like giving them a loan against future wages and as a result, an employer can't legally deduct the unaccrued v
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Forums » Topic Forums » Legal Forum » deducting used but "unearned" vacation from final paycheck
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deducting used but "unearned" vacation from final paycheck
posted at 3/18/2011 9:11 AM EDT
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Posts: 12
First: 3/18/2011 Last: 8/17/2011 |
I know that allowing an employee to use vacation time before it is accrued is, in effect, like giving them a loan against future wages and as a result, an employer can't legally deduct the unaccrued vacation time from an employees final paycheck. However, we have a waiver on our request for time off form, which is signed by HR, the employee and the manager for each reauest, which states the following:
The employee agrees that any payment of vacation benefits before it is earned shall be an advance of wages and if employement is terminated for any reason before the advance is earned, the amount of the advance shall be deducted from the employee's paycheck, including a final paycheck. Does the fact that we have employees sign off on these requests and in effect, agree to this policy, then make it okay for us to deduct "owed time" from an employee's final paycheck? |
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deducting used but "unearned" vacation from final paycheck
posted at 3/18/2011 9:28 AM EDT
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Posts: 2442
First: 2/12/2000 Last: 9/14/2011 |
I would check with a wage and hour attorney.
In my opinion it is probably ok as long as this document is signed each time an advance is made and the final paycheck does not pay the person less than the minimum wage. |
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deducting used but "unearned" vacation from final paycheck
posted at 3/18/2011 1:57 PM EDT
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Posts: 58
First: 10/17/2006 Last: 9/13/2011 |
Not sure what state you are in, but it probably would not fly in California. "Balloon payment on separation of employment to repay employeeâs debt to employer is an unlawful deduction even where the employee authorized such payment in writing." |
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deducting used but "unearned" vacation from final paycheck
posted at 3/18/2011 2:31 PM EDT
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Posts: 58
First: 10/17/2006 Last: 9/13/2011 |
See here http://www.dir.ca.gov/dlse/faq_deductions.htm
Good luck! |
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deducting used but "unearned" vacation from final paycheck
posted at 3/24/2011 8:33 AM EDT
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Posts: 1
First: 3/24/2011 Last: 3/24/2011 |
Increasingly, states are limiting the employer's right to make deductions from employees' salaries. The stricter rules require that each proposed deduction have a distinct approval letter with adequate detail to describe the situation. Blanket agreements are risky.
In Massachusetts, the Supreme Court just issued a ruling saying unilateral decisions by employers that employees owe a certain amount that will be deducted is illegal and subject to treble damages. On-going employees have an incentive to allow deductions; departing employees do not. It is a problem for employers. |
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deducting used but "unearned" vacation from final paycheck
posted at 3/24/2011 9:28 AM EDT
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Posts: 2442
First: 2/12/2000 Last: 9/14/2011 |
It is not a problem. It is something to be managed. Now that we know the rules we can certainly manage to it. The individual requirement for each advance request/repayment notification can be automated as part of the request made in your ERP. |
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