Massachusetts Loans: What you need to know

Massachusetts law allows employees to arrange for deductions to be made from their wages to repay loans (MA Gen. Laws Ch. 154 Sec. 8). An assignment of future wages to the employer, however, is not valid (MA Gen. Laws Ch. 149 Sec. 150). The deductions must be expressly authorized in writing by the employee and itemized on the statement of deductions provided with each paycheck (MA Gen. Laws Ch. 149 Sec. 150A).
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Repayment of loans can be assigned and deducted from an employee's wages under these conditions (MA Gen. Laws Ch. 154 Sec. 2 through Sec. 5):
• The amount assigned may be not more than 25 percent of the employee's weekly earnings.
• The assignment may not last for more than 2 years.
If the loan is for $3,000 or more:
• The debt must be secured at the time or before the time of assignment.
• The assignment must be executed in writing and signed by the employee, with date of execution, and rate of interest.
• The employer must receive a written consent of the assignor's spouse as well.
If the loan is for an amount under $3,000, the assignment rules are the same, with the following additions:
• The assignment must be filed with the city or town clerk.
• The amount assigned may not amount to more than $10 a week.
• The assignment may not last for more than 1 year.

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