Is It Legal for an Employer to Withhold a Paycheck?

by Grace Ferguson; Updated September 26, 2017

Most states set a time frame for when employers who do business in the state are supposed to pay employees by. Traditional paydays include weekly, biweekly, semimonthly or monthly; employers must usually pay employees for all wages or salaries due by one of these paydays. The employer can pay more often if it wants to, but not less.

Regular Paycheck

Since wages and salaries are due by the required minimum payday, an employer is not supposed to hold back or withhold an employee’s paycheck. As long as the employee renders service, the employer must pay her accordingly. Even if the state does not have a minimum payday, the United States Department of Labor, Wage and Hour Division, which oversees federal labor laws, requires employers to pay employees wages or salaries due in a prompt and accurate manner. Wages include regular pay, commissions, overtime, bonuses, and in most cases accrued benefit days under an established company policy, such as holiday, sick, vacation and personal time.

Final Paycheck

Federal law does not require employers to give employees their final paycheck immediately upon separation, but the employer is still required to pay all wages or salaries due within a reasonable time frame, such as by the next regular payday. Most states have final paycheck laws, which dictate the time frame and manner in which employees’ last wages and salaries should be paid. The state typically prohibits employers from withholding final paychecks. To avoid disputes with the employee and penalties from the state, the employer should pay final wages or salaries due by the required time frame.

Deductions

Along with mandatory deductions, such as federal income tax, Medicare tax and Social Security tax; and voluntary deductions, such as retirement and health benefits, the state might allow an employer to make other deductions from an employee’s wages. For example, in California, an employer can deduct payment for a paycheck advance from the employee’s regular paychecks. However, if the balance is for more than the installment payment and the employee terminates, the employer cannot make a balloon payment deduction from the final paycheck -- he can only make one regular installment deduction. The state usually allows the employer to make deductions from the employee’s final paycheck if she fails to turn in property entrusted to her, such as tools and uniforms.

Considerations

An employee can file a wage claim with his state labor department or pursue a private lawsuit if his employer withholds his paycheck. The state can order the employer to pay the employee back wages, liquidated damages, court or attorney costs, and possibly, a waiting-time penalty. The state also can fine and imprison the employer for breaking the law.

About the Author

Grace Ferguson has been writing professionally since 2009. With 10 years of experience in employee benefits and payroll administration, Ferguson has written extensively on topics relating to employment and finance. A research writer as well, she has been published in The Sage Encyclopedia and Mission Bell Media.