Is it legal if I work for a non-profit organization and the CEO took out a loan so now he wants to take money out of everyone’s bi-weekly check to pay it back?

UPDATED: Oct 1, 2022

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Is it legal if I work for a non-profit organization and the CEO took out a loan so now he wants to take money out of everyone’s bi-weekly check to pay it back?

As far as I know, he used the money from the loan to expand the company. I want to know is it legal for him to withdraw $3 from all the employees paychecks?

Asked on May 6, 2019 under Employment Labor Law, Ohio


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

It depends on how he intends to do this. Let us say that everyone currently earns $800/week to keep things simple. 
If he keeps their salary/wages at $800 per week, so they are earning the same, he cannot take any money, even $3 every other other week (so much less than 1%), from their pay unless they consent or agree to let him do this: the law is very clear that there are not deductions, etc. from money earned by employees without either employee consent or a court order. Employees who have money taken involunatarily from their paychecks could file a complaint with the state department of labor.
BUT he could reduce everyone's salary/wages going forward. Say that everyone is salaried at the level of $800/week x 52 weeks or $41,600/year. Say the needs to save some money for loan repayment, in an amount equal to $3 from each employee's biweekly check. He could reduce all their salaries in this example by $3/biweekly x 26 biweekly pay period or $78, so that now everyone earns $41,522 per year. If he does that, it is legal, because while an employer cannot take money already earned, the employer may change or reduce salary/wage in the future or for work not yet done (unless there is a written employment contract guarantying the salary/wage) and use the savings for some other purpose.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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