If I quit my job and am still owed money on a loan to the company with a contract stating I would make payments, do they still have to honor the contract payment plan?

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If I quit my job and am still owed money on a loan to the company with a contract stating I would make payments, do they still have to honor the contract payment plan?

I got a loan from the company I was working for to purchase tires for my truck that I used for company jobs. I signed a contract stating that I would make 100 payments. Well, I quit that job and they kept my last paycheck leaving my bank account in the negative because of auto pay bills I have. Was it legal for them to keep my whole check or do they still have to honor the contract? I texted the owner and told him that I would continue with the payments, however they took my whole check instead without telling me they were going to do that, even after I specifically said I would continue making the contracted payments.

Asked on March 22, 2019 under Employment Labor Law, Arkansas

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

What they did is illegal: 1) as long as you were making the payments, they had to honor the contract, too--by ignoring the terms of the repayment agreement, they breached the contract; 2) even if you had not been honoring the contract and so you owed them money (if you failed to make payments, generally the whole remaining amount would come due at once), the law is very clear that an employer may not take or withhold employee pay with either employee consent (agreement) or a court order (like for wage garnishment). 
While you still owe them whatever you do under the terms of the contract, you could sue them for the final paycheck and any other costs or losses you suffered (like if you had any NSF or overdraft fees) due to their action.


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