Can an employer pay an employee part or all of their wages in gift cards?

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Can an employer pay an employee part or all of their wages in gift cards?

Employer gave employee a $10 “birthday gift card” which came from the employees own pay. The money was deducted from the employee’s check, taxed, then given to the employee as a $10 birthday gift card.

Asked on October 21, 2011 under Employment Labor Law, Michigan

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Yes, but with two important limitations:

First and foremost, the employee MUST agree to this--generally in advance, though it is possible to retroactively ratify this. When work is done, the employee is entitled to be paid as per the terms under which he or she had performed the work. If the employee expected to be paid cash, he or she can't be forced to take the gift car as an alternative. So if employees agree to this, it may be legal, but not if they don't want--the employer can't retroactively change the terms under which the worked and force this on them.

Second, all labor laws must still be complied with, which means getting an amount in "cash" (or check or direct deposit) equal at least to minimum wage ($7.75) x the number of hours worked; getting overtime if a  nonexempt employee worked more than 40 hours that week; etc.


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