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Fair Measures, Inc. - Legal Training for Managers

Question & Answer

We owe employee and employee owes us - can we hold check until he pays us back? 02-06-2008

I am an HR representative for a hotel chain. Some accounting problems show that we owe an employee money (payroll). The employee is salaried and we owed money from past payroll checks, however, by a physical count of what we call a 'bank' the employee owes us money.

The company put a stop payment on the check (not my idea) and reissued another check. They are holding the check in lieu of the employee paying the amount owed in their "bank." Is this allowed? I think not but can't find any legal precedence to support. Thank you for your help in this matter.

Rita Risser replies:

It depends on state law and you should talk to a local attorney. But in California and many other states, you have to pay employees for working and if they owe you money, they can then pay you back -- you cannot deduct what they owe. If they don't pay, you could take them to small claims court.

Every manager needs to know the basics of employment law. Check out our Managing within the Law.

Information here is correct at the time it is posted. Case decisions cited here may be reversed. Please do not rely on this information without consulting an attorney first.
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