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Illegal Payroll Deductions

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Samantha Poole, NHHCT, Marketing & Sales Director



One of the NH Department of Labor's “Top Ten Labor Law Violations” is making a deduction from an employee's pay that is not allowed by statute. In New Hampshire, an employer can only deduct what is authorized in statute (275:48). This is important to note, as it is often misunderstood that just because a particular deduction is not listed as prohibited it is allowed when that is not the case. 


Can you deduct the credit card processing fees from tips? No. Although federally legal, the state of New Hampshire does not allow for any deductions that are not expressly permitted in 275:48.


Can you require an employee to pay for items that were misordered or damaged by the employee? No. Employees may be disciplined for poor work performance, but they cannot be required to reimburse the business for the lost income to the business that was incurred due to their mistake.


Does that include items that have been proven to be stolen by the employee? Yes. Although you cannot deduct the loss of income due to theft from your employee's pay, you can report the theft to law enforcement, and, depending on the situation, you may be able to recoup the lost income through legal channels.


Can you deduct uniform expenses or charge an employee for their uniform? If any garment has a logo or a distinctive design and the employer requires it to be worn while working, then it must be provided at no cost to the employee. The employee may then choose to purchase any other company garments if they wish. An employer also cannot deduct uniform expenses for uniforms not returned in an employee's last check. 


Examples of some items that may be deducted from an employee’s pay under NH state statute are:

  • Union dues

  • Health, welfare pension, and apprenticeship fund contributions

  • Voluntary contributions to charities

  • Housing and utilities

  • Payments into savings funds held by someone other than the employer

  • Voluntary rental fees for non-required clothing

  • Voluntary cleaning of uniforms and non-required clothing

  • The employee's use of a vehicle under RSA 261:111, III

  • Medical, surgical, hospital, and other group insurance benefits without financial advantage to the employer, when the employee has given his or her written authorization and deductions are duly recorded

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