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Understanding Ohio’s Wage Deduction Law

Question:  Can an Ohio employer deduct payments owed to it from an employee’s final wages?

Answer: In accordance with O.R.C. 4113.15, Employers may deduct from an employee’s final wages, Employee authorized deductions and any fringe benefits for which the employer has had to pay a third-party. 

Under the law, “Wage” means the net amount of money payable to an employee, including any guaranteed pay or reimbursement for expenses, less any federal, state, or local taxes withheld; any deductions made pursuant to a written agreement for the purpose of providing the employee with any fringe benefits; and any employee authorized deduction;

“Fringe benefits” includes but is not limited to health, welfare, or retirement benefits, whether paid for entirely by an employer or on the basis of a joint employer-employee contribution, or vacation, separation, or holiday pay; and

“Employee authorized deduction” includes but is not limited to deductions for the purpose of: (a) purchase of United States savings bonds or corporate stocks or bonds, (b) a charitable contribution, (c) credit union savings or other regular savings program, or (d) repayment of a loan or other obligation.  See Oil Chem. & Atomic Workers Int’l Union, Local Union No. 3-689 v. Martin Marietta Energy Sys., 97 Ohio App. 3d 364, 646 N.E.2d 883, 887 (4th Dist. 1994).  In Oil Chem. the Court determined that whether or not certain payments by the employer were fringe benefits or loans, the contracts authorizing repayment of the same to the employer was not unlawful, and the employer may deduct the same from an employee’s wages.  

Essentially, any Employee Authorized Deductions which are made in writing and signed by the employee may be deducted from an employee’s wage payment.  For example, the employer may agree to forward payment for professional fees and licensing for an employee in the form of a loan which may be forgiven within twelve (12) months.  As long as the employee signs a statement which states that the loan may be deducted from their wages, the employer may deduct the loan from the employee’s final wages if the employment is terminated before the completion of twelve (12) months.  Employee Authorized Deductions may be made a part of the Employment Contract.  

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