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Paycheck Deductions

Paycheck deductions are allowed if they are legally required or if you agree in writing and the deduction is for your benefit. Your paycheck must identify any withholdings.

Employers may not withhold, deduct or divert any portion of your wages unless they are: 

  • Deductions required by law such as taxes or garnishments (or related fees)
  • Deductions for your private benefit such as health insurance premiums. For these, you must sign a written authorization and the deductions must be recorded in the employer’s books and records.
  • Other deductions authorized by you in writing as long as the employer is not the ultimate recipient of the money. For example, charitable contributions.
  • Deductions authorized by a collective bargaining agreement
  • A deduction from a final paycheck for a cash loan to you, if you have voluntarily signed a loan agreement, and the loan was for your sole benefit (add'l limitations apply).

The law

ORS 652.610(3)

Frequently asked questions

For workers

Can my employer deduct money from my paycheck for till shortages and bad checks received in the course of my job?

No. Payroll deductions may not be taken for these purposes.

If I am negligent and destroy company property, can my employer deduct the value of that property from my paycheck?

No. Payroll deductions may not be made for this purpose. Disciplinary action may be taken and the employer could pursue reimbursement for damages through the court system.

Are payroll deductions allowed if I admit to stealing or negligence and agree in writing to pay the money back through payroll deductions?

No. A signed authorization would not be valid since this type of deduction is not permitted by statute.

Can my employer deduct money from my paycheck for the purchase of uniforms or tools?

No. Payroll deductions may not be taken for any item required to perform the job.

Can my employer require me to purchase uniforms or tools that are required to perform the job?

Minimum wage employees may not be required to purchase these items. The only exception to this rule is the requirement of a "generic uniform" which a minimum wage employee may be required to provide. An example of a generic uniform is a black skirt/pants and white blouse/shirt suitable for street wear. Payroll deductions are not permitted for this purpose. 

Employees who receive more than minimum wage may be required to purchase required items as long as a purchase does not have the effect of taking an employee below minimum wage in any pay period. Again, payroll deductions are not permitted.

Can my employer take payroll deductions for meals and lodging?

Yes, when meals and lodging are for the private benefit of the employee. In that case, meals and lodging purchased by the employer may be deducted from the paycheck as long as the employee has voluntarily signed an authorization. 

When the employee lives on the employer’s premises as a job requirement, lodging is not for the employee’s private benefit. In this case minimum wage must be paid in addition to the value of the lodging. As long as minimum wage is not violated, the employee may authorize payroll deductions for lodging which is for the employee’s private benefit.

Can I authorize my employer to deduct regular payments for items purchased from the employer for my personal benefit?

Examples: Items charged when the employer is a retailer; hospital stays and procedures when the employer is a hospital. 

Yes, as long as the items are for the benefit of the employee and the deduction authorization is signed.

Can my employer deduct fees for processing garnishments?

Yes. An employer may collect a $2 processing fee for each week of wages garnished under ORS 18.736. This fee must be collected after the last payment is made under the writ. Remember, this fee may not be collected if withholding the fee would take them below 75% of disposable earnings or $254 per week, whichever is more. This deduction is not applicable to processing fees for wages garnished under separate legal authority - though those garnishments may also authorize an employer to collect a specific amount for processing.

For employers

Employers need to provide employees with a written itemization of earnings and any deductions (a paystub) with every compensation payment. Click here for the requirements for written itemized statements.

Can an employer deduct for till shortages and bad checks taken by the employee contrary to company policy?

No. Payroll deductions may not be taken for these purposes.

What can an employer do if an employee experiences till shortages or accepts bad checks?

Employers should communicate policies and procedures clearly to employees. Employees who fail to follow procedures may be subject to disciplinary action. It is unwise to assume that an employee has been dishonest; however, discipline up to and including termination may be taken if an employee does not follow policies. The violations could be characterized as "failure to balance till accurately," or "failure to follow company policy requiring appropriate identification when accepting checks."

If an employee is negligent and destroys company property, can an employer deduct the value of that property from the paycheck?

No. Payroll deductions may not be made for this purpose. Disciplinary action may be taken and the employer could pursue reimbursement for damages through the court system.

Are payroll deductions allowed if an employee admits to stealing or negligence and agrees in writing to pay the money back through payroll deductions?

No. A signed authorization would not be valid since this type of deduction is not permitted by statute.

Can an employer deduct for the purchase of uniforms or tools?

No. Payroll deductions may not be taken for any item required to perform the job.

Can an employer require employees to purchase uniforms or tools that are required to perform the job?

Minimum wage employees may not be required to purchase these items. The only exception to this rule is the requirement of a "generic uniform" which a minimum wage employee may be required to provide. An example of a generic uniform is a black skirt/pants and white blouse/shirt suitable for street wear. Payroll deductions are not permitted for this purpose. 

Employees who receive more than minimum wage may be required to purchase required items as long as a purchase does not have the effect of taking an employee below minimum wage in any pay period. Again, payroll deductions are not permitted.

Can an employer take payroll deductions for meals and lodging?

Yes, when meals and lodging are for the private benefit of the employee. In that case, meals and lodging purchased by the employer may be deducted from the paycheck as long as the employee has voluntarily signed an authorization. 

When the employee lives on the employer’s premises as a job requirement, lodging is not for the employee's private benefit. In this case minimum wage must be paid in addition to the value of the lodging. As long as minimum wage is not violated, the employee may authorize payroll deductions for lodging which is for the employee’s private benefit.

Whom does an employer contact for information regarding deductions for tax withholdings required by law?

Contact the Oregon Department of Revenue (state withholdings), (503) 378-4988, or the Internal Revenue Service (federal withholdings), (503) 221-3960.

Are payroll deductions permitted if an employer loans an employee money to purchase tools, equipment, or any items that are required to perform the job?

No. However, employees may be required to purchase these items in cash as long as the purchase does not reduce the employee below minimum wage in the pay period.

Is the answer different if the employee owns the items when employment terminates?

No. The deduction is still prohibited.

Can an employee authorize the employer to deduct regular payments for items purchased from the employer for the employee’s personal benefit?

Examples: Items charged when the employer is a retailer; hospital stays and procedures when the employer is a hospital. 

Yes, as long as the items are for the benefit of the employee and the deduction authorization is signed.

Can an employer deduct for processing garnishments?

Yes. An employer may collect a $2 processing fee for each week of wages garnished under ORS 18.736. This fee must be collected after the last payment is made under the writ. Remember, this fee may not be collected if withholding the fee would take them below 75% of disposable earnings or $254 per week, whichever is more. This deduction is not applicable to processing fees for wages garnished under separate legal authority - though those garnishments may also authorize an employer to collect a specific amount for processing.

I have an employee who has been out on family leave. He has informed me that he will not be returning to work. During his absence, I paid for his group health insurance premiums. He is still owed some money for accrued vacation and for some earned commissions that came in during his absence. Is it permissible to deduct the costs of the premiums paid on his behalf from his checks?

Yes. Both the Oregon Family Leave Act and the federal Family and Medical Leave Act allow for this deduction unless the employee’s failure to return to work is due to circumstances beyond the employee’s control or a continuation of the serious health condition that entitled the employee to family leave. OAR 839-009-0270(6)(e); 29 CFR §825.213.

I have an employee who has been out on jury service for nearly a month, with no end in sight! During his absence, I have continued to pay for his contribution to group health insurance premiums. Is it permissible to deduct the costs of those premiums I paid on his behalf from his wages when he comes back?

Employers with 10 or more employees are required to continue health, disability, life or other insurance while the employee is on jury duty. ORS 10.092 allows an employer to make deductions from the employee’s pay for any part of the costs of providing health, disability, life or other insurance coverage for the employee that should have been paid by the employee while on jury service, upon the employee's return to work. Although the total amount deducted for such insurance may not exceed 10 percent of the employee's gross pay each pay period, the employer may continue to make deductions until the amount the employer advanced toward these payments is repaid. Additionally, if the employee ceases to work for the employer before the amount of these advances has been repaid, the employer may deduct the remaining balance owed for these advances (and these advances only) from any amounts owed by the employer to the employee, or the employer may seek to recover those amounts by any other legal means.

Disclaimer: This website is not intended as legal advice. Any responses to specific questions are based on the facts as we understand them and the law that was current when the responses were written. They are not intended to apply to any other situations. This communication is not an agency order. If you need legal advice, please consult an attorney.​