Connecticut Loans laws & HR compliance analysis

Connecticut Loans: What you need to know

Under Connecticut law, employers can make deductions from an employee's pay to repay a loan only when the employee has executed a payroll deduction authorization form that has been approved by the state labor commissioner (CT Gen. Stat. Sec. 31-71e(2)). If an employee receives the full pay and then returns part of it to the employer (in cash or through a personal check) in repayment of the loan, this does not constitute a deduction from pay. Employers that make loans may require employees to sign an agreement to reimburse the company for a loan if they resign before some specified date. However, such agreements cannot be enforced by payroll deduction. Tax levies, support orders, and garnishments take precedence over a company loan because they are orders of a court.
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For additional information, contact:
Connecticut Department of Labor
Wage and Workplace Standards
200 Folly Brook Boulevard
Wethersfield, CT 06109
Last updated on December 20, 2015.

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