Opinion ID: 1614964
Heading Depth: 3
Heading Rank: 3

Heading: Deduction From Wages.

Text: Condon further claims it could not be liable for damages because it was legally permitted to withhold the wages under section 91A.5(1) as a setoff against its claim for the excessive draw. The Act clearly allows the employer to deduct wages only when permitted by law, court order, or authorized by the employee. Iowa Code § 91A .5(1). Condon claims the law recognizes setoff as a mechanism to resolve competing disputes. There is no state or federal law which permits an employer to set off its claims against employees' wages. Moreover, the doctrine of setoff is an incident of a judicial proceeding, and is generally accomplished only by court action. See 20 Am.Jur.2d Counterclaim, Recoupment, Etc. § 6, at 233 (1995); Iowa R.Civ.P. 225. It is not a unilateral procedure legally employed by a party to a dispute. See Cameron v. Neon Sky, Inc., 41 Wash.App. 219, 703 P.2d 315, 317 (1985); see also National Med. Care, Inc. v. Zigelbaum, 18 Mass.App.Ct. 570, 468 N.E.2d 868, 874 (1984) (employer has no right to unilateral setoff); P & L Group, Inc. v. Garfinkel, 150 A.D.2d 663, 541 N.Y.S.2d 535, 537 (1989) (employer not entitled to self-help remedy of withholding money owed by employee). Furthermore, the restrictions on the deductions under section 91A.5 clearly illustrate an employer may not use wages as a basis for any self-help remedies in collecting an indebtedness. Section 91A.5(1) makes it unlawful to withhold any portion of the wages of an employee except under the two statutorily-described circumstances. See Cameron, 703 P.2d at 317 (interpreting wage payment collection statute similar to Iowa statute). None of the circumstances under the statute apply to the facts of this case, and Condon had no right to withhold the wages. We conclude Condon violated the Wage Payment Collection Act by withholding Crick's wages at Condon Ford. Thus, Condon was liable as a matter of law to Crick for the unpaid wages, court costs, and attorney fees. The question turns to whether Condon was also liable as a matter of law for liquidated damages.