May we deduct new hire sign-on bonuses from a final paycheck?

Even if new hires who received a sign-on bonus don’t work out, employers may never make deductions for compensation already paid to employees, including from a final paycheck, unless the deductions are related to a legally compliant commissions plan.

If the sign-on bonus is part of an agreement between the employer and the employee in which the employer offers the benefit in exchange for the employee’s promise to repay the bonus if they leave before a certain time — sometimes referred to as a “stay or pay” agreement — the employer may be able to seek repayment of the bonus, depending on the circumstances.