Expert: Shirley McAllister, CPP, PHR - 3/31/2011

Question
An employee receives relocation dollars and signs an agreement that if they quit before 2 years of service they must repay the relocation.  On their final check can we calculate their earnings and taxes and then withhold the relocation amount bringing their net to zero?

Answer
you cannot do this. Federally, You cannot take any deduction whether or not they signed for it that takes their pay below minimum wage. There are some states that have state rules that prohibit certain deductions from final pay and are more restricting than the federal rules.

You will have to either make arrangements with the employee to repay the amounts or take the employee to court to collect the amounts owed.

I don't know which state you are in but I strongly suggest you check your state regulations before taking this deduction from a final check of an employee.

Shirley