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?

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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

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 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.


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