There is nothing in Tennessee law to prohibit the deduction from an employee's wages of payments on an advance or loan from the employer. Employers and employees are free to make additional arrangements for deductions they consider mutually acceptable.
Document authorization. Employers should get a signed authorization for the deduction that includes a clear statement of the amount and term of the loan and the amount of the deduction. The amount of the deduction and the balance amount of the loan should also be included on the statement of deductions provided with each paycheck.