HR Hotline: Can We Deduct Negative PTO Balance from a Final Paycheck?

03.27.2024
HR & Safety

Q: One of our employees recently quit, right after taking a vacation. When they left, they had a negative PTO balance.

While they hadn’t accrued enough PTO hours to take a full week off, we allowed the vacation because we assumed they would accrue the time by the end of the year. May we now deduct the value of the negative PTO balance from their last paycheck?

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A: No, not unless you have written authorization from the employee, on a form pre-approved by the Labor Commissioner. 

Employers often find themselves in a position where an employee arguably owes them money—whether that’s because the worker used PTO they hadn’t yet earned, accepted a loan they never paid back, damaged company property, or even committed theft. 

However, Connecticut law restricts an employer’s ability to recoup those losses through paycheck deductions. Wages, in the eyes of the Department of Labor, are sacrosanct.

Section 31-71e of Connecticut’s statutes provides that an employer may only withhold wages from an employee in five circumstances: 

  1. When the employer is required or empowered to do so by state or federal law (such as tax withholdings);
  2. The employer has written authorization from the employee on a form approved by the Labor Commissioner;
  3. The employee has authorized the deductions for health insurance premiums;
  4. The deductions are for retirement contributions;
  5. When another state’s law requires the employer to withhold income tax for that state.

Collections

The practical result of this law is that employers will often have to resort to other means of collecting amounts due.

For example, an employer can address minor theft by filing a small claims action, or by contacting the police and filing suit for larger amounts.

For those employers with written acknowledgements of a loan, a breach of contract action may be an option.

None of these options are without cost, of course, so an ounce of prevention truly is worth a pound of cure.

An ounce of prevention truly is worth a pound of cure.

One way to prevent these costly alternatives is by utilizing the Labor Department’s website to obtain approval of a payback plan that uses the employee’s paycheck, whether it’s their last paycheck or not.

You can create a form that stipulates, for example, that any negative PTO balances in effect at the time of employment separation will be deducted from the employee’s last paycheck.

Upload the form, and if the department approves it and the employee signs it, you may deduct the PTO from the employee’s last check.

If the employee refuses to sign it, you know not to be generous by allowing a vacation that hasn’t yet been earned.


HR problems or issues? Email or call CBIA’s Diane Mokriski at the HR Hotline (860.244.1900) | @HRHotline. The HR Hotline is a free service for CBIA member companies.

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2 thoughts on “HR Hotline: Can We Deduct Negative PTO Balance from a Final Paycheck?”

  1. We include a statement in our terms of employment stipulating that if the employee uses more PTO than earned at the time of separation, we will deduct that amount from their final check. The employee signs the terms of employment. Would this suffice?

  2. Diane Mokriski says:

    That would only suffice if the Labor Department had approved your terms of employment letter. You can upload that letter to the Labor Department site and request approval for the PTO portion. If you receive that approval, you can then use the terms of employment going forward.

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