Like most states, North Carolina requires employers to obtain advance written authorization from employees before making deductions from pay that are not otherwise required by law (i.e., taxes). When the exact amount of the deduction is known in advance, this is set out in the authorization, and the employer may proceed unless the employee withdraws the authorization before the deduction is made. What happens, however, when at the time the authorization is provided, the employer and employee do not know the amount to be deducted? We have seen a number of recent situations where employers have gone ahead with the deduction without following requirements of North Carolina law.
Under the North Carolina Wage and Hour Act, when the amount of the deduction is not known at the time the authorization is given, the employer must provide written notice of the specific amount to be deducted and provide employees with notice of their right to withdraw authorization for the deduction - prior to actually deducting from wages. These rights do not apply to deductions made for cash or inventory shortages, or loss or damage to employer property. But those exceptions only cover some of the reasons why an employer would seek authorization.
Failure to follow these requirements can result in claims for double the amount of deducted wages plus attorneys’ fees. If the exact amount to be deducted from each check can be ascertained in advance, it should be set forth in the authorization. If not, North Carolina employers need to take this additional step before actually applying the deduction