Offsetting Employee Wages

T.C.A. § 50-2-110

Tennessee law allows an employer to offset an employee’s wages for a specific amount the employee owes the employer only in limited circumstances. The amount must be a wage advance, loan, or personal charge made on an employer-issued business or corporate credit card.

Before offsetting wages, the employer must:

• Have a written agreement, signed by the employee before the advance, loan, or charge occurs, authorizing the wage offset;

• Retain a copy of the signed agreement at the time of the offset;

• Provide the employee written notice at least 14 days before the wages are paid. The notice must state the amount owed, explain that wages may be offset if the amount is not paid before payday, and inform the employee of the right to contest the debt by sworn affidavit; and

• Confirm that the employee has not paid the amount owed before the wage-payment date.

An employer may not offset wages if the employee, within seven days after receiving the notice, sends a sworn affidavit contesting the amount owed to the employer and sends a copy to the Tennessee Department of Labor and Workforce Development. If the employee timely contests the debt, the employer may pursue an appropriate civil action to recover the amount alleged to be owed.

“Wages” includes remuneration for services, such as commissions, bonuses, incentive-program rewards, and tips.

This statute does not provide general authority to deduct from wages for shortages, damaged or unreturned property, disciplinary penalties, or other disputed amounts. Cities should consult their attorney before making deductions outside the circumstances specifically addressed in T.C.A. § 50-2-110.