Can my employer withhold my last paycheck if I owe a company loan?

UPDATED: Sep 30, 2022

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Can my employer withhold my last paycheck if I owe a company loan?

My boss gave me a loan through a company check and company credit card. my last day working there was today. I was given my last paycheck and told my commission based checks would be held onto by the business to pay back the loan I received. Is it legal for them to hold earned money to pay back a loan such as this?

Asked on December 18, 2015 under Employment Labor Law, California


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 7 years ago | Contributor

No, they could only withhold the money IF you had signed an agreement allowing them to debit your last check(s) for any unpaid loans. If they won't pay you, you could sue them for the money; but that may not help in practice, since they could countersue you in the same action for the money you owe them, and a court would net out what they owe you vs. what you owe them to determine who is paid how much. So even though they were wrong in how they did this--since the proper way to get the money would have been to sue you--once you bring them into court, they can bring up what you owe them and you won't be able to collect your paycheck without also paying the loan.

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