Law Office of Marc J. Smith, LLC
Employment Law and Litigation Counsel

Employment Law Blog

Withholding Compensation Can Be A Costly Proposition

Our clients frequently seek advice concerning their rights when a departing employee owes money to the company.  This issue presents itself in many different contexts — an employee refuses to return a laptop or other company property, has borrowed money from the company, received tuition assistance or costly training, received a payroll advance or leaves with a negative vacation balance.  Withholding an employee’s final paycheck may seem like an easy and painless solution, but the fact is, this is appropriate in Maryland only if the employee has provided prior written authorization for such a deduction.   It is a relatively simple matter to obtain appropriate written authorization, however, most employers don’t consider the issue until it is too late.

Unauthorized wage deductions violate Maryland’s Wage Payment and Collection Law, which provides for up to treble (triple) damages (i.e. you may end up owing your former employee triple the amount you withheld) plus attorney’s fees.   When making loans, providing advances or entrusting expensive equipment to employees, employers should protect themselves with appropriate documentation in the event it becomes necessary to withhold wages.

Marc Smith