Benefits and Compensation, HR Management & Compliance

Ask the Expert: Deductions from Pay for Mandatory LTD Coverage?

Our Company Long-Term Disability (LTD) insurance rates are much lower if we have 100% employee participation. Can we enroll all of our employees and charge them a percentage of the cost of coverage? We have employees in Arkansas, Oklahoma and Oregon.

Here is your answer from the experts at

Arkansas has few restrictions on deductions from employees’ paychecks, though employers are required to withhold for state and federal taxes.
Under Oklahoma law, an employer may deduct from an employee’s wages only charges required by law, permitted by law, or authorized by the employee in accordance with state law.

And in Oregon, employers may lawfully make deductions from employees’ wages only if the deductions are:

  • Required by law;
  • For the employee’s benefit, authorized in writing by the employee, and recorded in the employer’s books;
  • For any other item voluntarily authorized by the employee provided that the employer is not the ultimate recipient of the money;
  • Authorized by a collective bargaining agreement to which the employer is a party; or
  • From the payment of wages upon the termination of employment if the deduction is for the repayment of a loan from the employer to the employee made for the benefit of the employee, for which the employee voluntarily signed a loan agreement, and the loan is recorded in the employer’s records.

More generally, under federal law, deductions that benefit the employee (including deductions for life insurance, health insurance, pension, and welfare plans; contributions to charity; repayment of salary advances; and the purchase price of U.S. Savings Bonds) may cut into the minimum wage if the employee freely assents and if the employer derives no profit or benefit from the deductions.

There would be no problem in any of these states with enrolling 100% of your employees in your LTD plan if you, as the employer, covered all of the associated costs. Barring that, obtaining written consent before charging them any of the costs would be advisable (as would consultation with a qualified attorney familiar with the specifics of your particular situation).

For more state-specific information on Deductions from Pay, visit