Montana Deductions from Pay laws & HR compliance analysis

Montana Deductions from Pay: What you need to know

Under Montana law, an employer may make deductions from employees' wages for:
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• State and federal income taxes and Social Security.
• Reasonable cost of room, board, and incidentals supplied by the employer, as long as the employee had knowledge that such deductions were made a condition of employment (MT Code Sec. 39-3-2044). However, if the room and board are provided primarily for the benefit and convenience of the employer deductions are not permitted (MT Admin. Code Sec. 24.16.1505).
• Deductions that are authorized by the employee such as for union dues or health insurance premiums (MT Admin. Code Sec. 24.16.2533).
An assignment of wages is a method of debt repayment in which part of an employee's pay is withheld and paid over to a creditor. In Montana there are two types of wage assignments: an assignment to secure the purchase of goods on credit and an assignment for past due child or spousal support. There is additional information on the second type of assignment relating to child or spousal support.
Goods on credit. An assignment of wages made in connection with a purchase of goods on credit is limited to 10 percent of the employee's net wages (MT Code Sec. 32-5-310). Only if the employee defaults on the payments may the creditor send notice to the employer requesting assignment of the employee's wages. Notice must be signed by the employee and served on the employer or a managing agent of such employer, must be verified by the oath of the licensee or his agent, and must include:
• A correct copy of the assignment
• A statement of the amount of such loan and the amount due and unpaid thereon
• A copy of MT Code Sec. 32-5-310
The employer has the option of deciding whether to ...

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