Can my employer borrow my Christmas Club savings?

We agree to have a certain amount deducted from our pay for a Christmas Club that is suppose to be put in an account at our local bank. Come to find out, our funds have not been deposited into a bank account. Our company is using our funds to pay bills throughout the year. I’m sure it will all be paid oit to employees at the end of the year with interest as it should be but this just seems wrong.

Asked on July 6, 2012 under Employment Labor Law, Alabama


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

No, your employer may NOT do this. Amounts deducted from your paycheck for a savings plan like this are YOUR money and the employer has no right to it without your permission or consent. What the employer has done is actually a form of theft; you could potentially report the employer to the authorities, or sue to recover your money (or both). Bear in mind in deciding what to do that if the employer is illegally raiding employee money, there is likely either 1) embezzlement going on and/or 2) the company is in bad financial condition--either way, do not assume it will necessarily be paid back.

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