Withholding Pay When Employees Breach Contract


A common situation for employers, especially in industries with high turn over rates and entry level employees is when employees leave without notice in breach of their contract and employment laws. If the employee still has pay outstanding, the question becomes whether or not the employer can withhold pay in compensation for the breach?

In NY at least, the answer is no. In most states, employers are not allowed to withhold pay simply because an employee breached a contract. In many states, employers may also be subject to punitive damages, statutory interest penalties as well as the cost of the employee’s attorney fees. In both NY and CT, withholding employee pay in certain circumstances may also be considered a criminal offense.

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