Q. I fired an employee for violating company rules, one of which resulted in the employee owing the company money. I withheld the employee’s last paycheck until the money is paid back. Now the employee has gotten a lawyer and is threatening to sue to get the paycheck. Do I have to give the employee the paycheck with no guarantee that I will ever get the money back?
A. With very few exceptions, you cannot withhold the final paycheck of a fired employee, including situations where the employee owes you money or has company property in his or her possession.
Federal law requires you to pay your employees what you owe them, deducting only money that you are legally required or legally allowed to take out, such as taxes and Social Security.
State laws vary, so check your state’s regulations. In most states you must have your employee’s written authorization to deduct for debts.