Possible Conflict between FLSA vs. Oregon Law on Deductions from Final Paychecks

Earlier this week, the Ninth Circuit Court of Appeals affirmed a decision from a California District Court holding that an employer did not violate the Fair Labor Standards Act (FLSA) when it withheld wages from employees’ final paychecks to repay outstanding balances due on credit cards guaranteed by the employer.  The Court explained that since the FLSA did not require the employer to pay remaining vacation and sick time to employees upon termination, and the employees were paid all overtime and minimum wages due upon termination, the employer could offset the balances owed on company credit cards against the vacation and sick time.   Put another way, the Court found that as long as the employees were paid all wages (including overtime) due when terminated, the employer could offset amounts owed by the employees on company credit cards against accrued paid vacation or sick time without violating the FLSA. http://cdn.ca9.uscourts.gov/datastore/memoranda/2014/01/09/11-56757.pdf

It is questionable whether such a deduction would be permitted under Oregon’s wage and hour laws.  Arguably, such a deduction might be permitted if the credit card charges constitute a “cash loan” to the employee and the employee voluntarily signs an agreement and gets the benefit of the loan.  On the other hand, if the employee asserts that the charges are not for their benefit, the deduction would not be permitted by Oregon law. ORS 652.610.  http://www.oregon.gov/boli/TA/pages/t_faq_tadeduc2.aspx

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