In order to deduct a loan repayment from an employee's pay, the employer must provide an itemized statement showing the amount and purpose of the deduction.
Deduction from final paycheck. If the deduction is made from the payment of wages upon termination of employment, it must be authorized by written agreement between the employee and employer, and all of the following conditions must be met:
• The employee voluntarily signed the agreement;
• The loan was made solely for the employee's benefit and was not used, either directly or indirectly, for any purpose required by the employer or connected with the employee's employment with the employer; and
• The amount of the deduction at termination is subject to certain limitations(OR Rev. Stat. Sec. 652.610, Sec. 18.385, Sec. 652.110).
Last reviewed on March 10, 2016.