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Payroll Laws: Reducing/Deducting an Employee’s Final Wages

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Understanding payroll laws in Oklahoma from the perspective of the employer

John left the company last week and you are currently processing his final paycheck. Well, since John hasn’t returned his company uniforms as requested the employer will simply deduct the amount owed from his final pay, right? Not so fast! There are strict state laws regarding what can legally be deducted from an employee’s earned wages as well as when the employee must receive his/her final paycheck.    

According to BLR’s article, Oklahoma Deductions From Pay: What you need to know”; Under Oklahoma Law, an employer may deduct from an employee’s wages only charges required by law, permitted by law, or authorized by the employee in accordance with state law.  These “legal” deductions include federal, state, and local income tax withholdings, FICA taxes, and court-ordered garnishments or other deductions.

Therefore, in order for an employer to legally deduct the items below from a current or final paycheck both employer and employee must enter into a written and signed payroll deduction agreement prior to withholding for these purposes:  

  • To repay a loan or advance that the employer made to the employee during the course of and within the scope of employment

  • To recover payroll overpayments

  • To compensate the employer for merchandise or uniforms purchased by the employee

  • To pay for benefits and insurance premiums but not workers' compensation or unemployment compensation

  • To compensate the employer for breakage or loss of merchandise, inventory shortages, or cash shortages incurred while the employee was solely responsible for the cash or items damaged or lost


For more information please contact the Oklahoma Department of Labor website.

LUXA Enterprises is a group specializing in payroll services for small and mid-size businesses in the Tulsa and surrounding areas.  LUXA Enterprises provides help in payroll processing services for small businesses to increase each entity to grow from a trusted provider.

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Topics: Payroll accuracy