Indiana Employment Law: What Can Be Taken Out of an Employees Check?

Some things can be forced - garnishments and income withholding orders. Call those involuntary deductions. For involuntary deductions, Indiana employees and employers must comply with IC 22-2-6-2.

IC 22-2-6-2 has a process that must be followed:

(a) Any assignment of the wages of an employee is valid only if all of the following conditions are satisfied:

(1) The assignment is:

(A) in writing;
(B) signed by the employee personally;
(C) by its terms revocable at any time by the employee upon written notice to the employer; and
(D) agreed to in writing by the employer.

(2) An executed copy of the assignment is delivered to the employer within ten (10) days after its execution.
(3) The assignment is made for a purpose described in subsection (b).

Subsection (b) refers to the following things for what a deduction can be made. If it is not on this list, the employer cannot deduct the money even if the employee and employer correctly followed procedure.

(b) A wage assignment under this section may be made for the purpose of paying any of the following:

(1) Premium on a policy of insurance obtained for the employee by the employer.
(2) Pledge or contribution of the employee to a charitable or nonprofit organization.
(3) Purchase price of bonds or securities, issued or guaranteed by the United States.
(4) Purchase price of shares of stock, or fractional interests therein, of the employing company, or of a company owning the majority of the issued and outstanding stock of the employing company, whether purchased from such company, in the open market or otherwise. However, if such shares are to be purchased on installments pursuant to a written purchase agreement, the employee has the right under the purchase agreement at any time before completing purchase of such shares to cancel said agreement and to have repaid promptly the amount of all installment payments which theretofore have been made.
(5) Dues to become owing by the employee to a labor organization of which the employee is a member.
(6) Purchase price of merchandise sold by the employer to the employee, at the written request of the employee.
(7) Amount of a loan made to the employee by the employer and evidenced by a written instrument executed by the employee subject to the amount limits set forth in section 4(c) of this chapter.
(8) Contributions, assessments, or dues of the employee to a hospital service or a surgical or medical expense plan or to an employees' association, trust, or plan existing for the purpose of paying pensions or other benefits to said employee or to others designated by the employee.
(9) Payment to any credit union, nonprofit organizations, or associations of employees of such employer organized under any law of this state or of the United States.
(10) Payment to any person or organization regulated under the Uniform Consumer Credit Code (IC 24-4.5) for deposit or credit to the employee's account by electronic transfer or as otherwise designated by the employee.
(11) Premiums on policies of insurance and annuities purchased by the employee on the employee's life.
(12) The purchase price of shares or fractional interest in shares in one (1) or more mutual funds.
(13) A judgment owed by the employee if the payment:

(A) is made in accordance with an agreement between the employee and the creditor; and
(B) is not a garnishment under IC 34-25-3.

In the past year, more employers seem more ignorant of this law than in the past. As usual, ignorance has its costs.