top of page

Paychecks Come First: Why Employers Can’t Withhold Final Paychecks to Recover Company Property

  • Writer: Roberta Edwards
    Roberta Edwards
  • 9 minutes ago
  • 2 min read
paycheck
Paycheck

Even if company property is not returned, New Mexico law prohibits an employer from withholding an employee’s final paycheck to recover the items' value. Wage and hour laws require that final wages be paid on time, regardless of whether the employee still has company property in their possession.  (Not in New Mexico? You can check your state’s final pay requirements using this link: https://www.dol.gov/agencies/whd/state/contacts)


In New Mexico, wage and hour laws are clear. An employer may not take money from an employee’s paycheck without the employee's signed agreement. This applies to any deduction that is not legally required and does not include deductions such as taxes or court-ordered garnishments.


Why You Need Signed Agreements for Deductions

Suppose an employer intends to deduct money from an employee’s wages for a reason such as reimbursement for lost or damaged company property. In that case, it must be backed by a written agreement signed by the employee. The deduction is illegal without this, and the employer may face penalties.


Protecting Company Property, the Right Way

Employers often issue valuable items to employees, such as:

  • Computers and laptops

  • Mobile phones

  • Uniforms

  • Keys or access cards

  • Tools or other specialized equipment


To protect these assets, it is essential to have employees sign a property issuance agreement at the time the items are provided. This agreement should contain:

  1. A list of each item issued to the employee.

  2. The replacement value of each item.

  3. A statement that the employee agrees to return the items in good condition upon termination of employment.

  4. An explicit, signed authorization for the value to be deducted from the employee’s paycheck if the items are not returned, are damaged, or stolen due to the employee’s negligence.


Bottom Line

Having an explicit, signed agreement for both wage deductions and issued company property isn’t just best practice; it’s the law in New Mexico.


The correct process to recover money for the value of company property not returned is to implement a signed deduction agreement upon issuance of the property, and deduct the value from the employee’s final paycheck, keeping in mind that an employee’s wages cannot fall below the applicable minimum wage because of the deduction.   If there is no signed agreement, seek recovery through other legal means (such as small claims court).


Protect your business by putting the proper documents in place and ensuring you comply with wage and hour regulations.


Disclaimer: The information provided in this blog is for informational and educational purposes only and should not be construed as legal advice. Laws and regulations vary by jurisdiction and specific circumstances. Employers and individuals should consult with their attorney or qualified legal professional to determine the appropriate course of action for their particular situation.


Roberta Edwards

Roberta Edwards is a Senior HR Consultant with over 20 years of professional experience. Follow Edwards HR Consulting on LinkedIn and Facebook and read more about Roberta here.

 

Quick links

Contact

Edwards HR Consulting
Albuquerque, NM  
(505) 917-4558

Hours:
Monday: 8:00 a.m. - 5:00 p.m.
Tuesday: 8:00 a.m. - 5:00 p.m.
Wednesday: 8:00 a.m. - 5:00 p.m.
Thursday: 8:00 a.m. - 5:00 p.m.
Friday: 8:00 a.m. - 5:00 p.m.
Saturday: Closed
Sunday: Closed

Follow Us

  • LinkedIn Social Icon
  • Facebook Social Icon

Recent Posts

Newsletter Subscription

Thanks for submitting!

Gallup Strengths Certified Coach

©2017-2025 by Edwards HR Consulting, LLC

bottom of page