It is best to have all employees sign a wage deduction authorization agreement (see an example of such a form in the section of this book titled The A to Z of Personnel Policies) listing all the various types of deductions from pay that might be made and the amounts (as specific as possible) that would be deducted in case those situations were to arise. In addition to the wage deduction authorization agreement, certain deductions should be individually and specifically authorized in writing to give the employer the greatest amount of protection in case a wage claim is filed. Those would include any type of loan or wage advance; before the money changes hands, the employer should have the employee sign a detailed receipt and repayment agreement specifying what the installment payments will be and what happens to a balance remaining when an employee leaves the company. Similarly, before an expensive piece of equipment is checked out to an employee, the employee should sign a form acknowledging receipt, promising return of the item in good shape, and specifically authorizing a deduction from pay in a specific dollar amount in case of damage or non-return of the item.
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