Kentucky law allows deductions from an employee's wages to make payments on an advance or loan from the employer. A deduction made to pay off a loan owed to the employer must be authorized in writing by the employee.
The signed authorization should include a clear statement of the amount and terms of the loan and the amount of the deduction. The employer must keep a record of wage payments, which should include all deductions, showing the reason for the deduction; the amount deducted; and in the case of a loan repayment, the total amount of the loan for which the deductions are made. The amount and general purpose of any deduction must also be included on the statement of deductions provided with each paycheck (KY Rev. Stat. Sec. 337.060).
Last reviewed on January 22, 2016.