Can Employees Donate to their Nonprofit Employer via Payroll Deduction?
Posted on May 22, 2012.
With more than 8,000 organizations statewide, nonprofits make up a significant portion of NH's workforce. More than 1 in 7 employees in the State work for a nonprofit. Recently, an interesting question was posed to me - is it ever appropriate to withhold pay from an employee's paycheck if that deduction is being made to benefit the nonprofit organization that the employee works for?
Can Employees Donate to their Nonprofit Employer via Payroll Deduction?
Many employers provide their employee's with the ability to donate to a good cause like the United Way or March of Dimes, via payroll deduction. It would seem to make sense that an employee of a nonprofit could use the convenience of payroll deduction to make contributions to the organization that they work for.
In 2011, the Governor Lynch signed a new law revising RSA 275:48, which defines what is a legitimate deduction from an employee's paycheck. Prior to this revision, deductions from employee paychecks had been limited to a specific list of allowable decoctions.
With the revisions to RSA 275:48, effective August 6, 2011, deductions may be made from an employee's paycheck...
"For any purpose on which the employer and employee mutually agree that does not grant financial advantage to the employer, when the employee has given his or her written authorization and deductions are duly recorded. The withholding shall not be used to offset payments intended for purchasing items required in the performance of the employee's job in the ordinary course of the operation of the business."
Due to the fact that the deduction cannot provide a financial benefit to the employer, the withholding of wages for a charitable contribution to the organization that an employee works for is not legitimate under NH law.
One possible way around this is to have the employee contribute to the United Way, designating the employee's employer as the recipient of the contribution.