It is illegal for you to withold or ask an employee not to cash a paycheck they had legally earned by doing work for you unless it is in an employees handbook that they would be responsible for say Uniforms, etc and that money would come from a paycheck.
IF there is a Cash Shortage, as I believe you are saying you are experiencing then you need to get permission in writing from the employee.
The other exception under AZ law is if there is a wage dispute
. An employer must pay an employee all wages due that are not in dispute, but may withhold the disputed amount, including the amount of any counterclaim in addition to any claim of debt, reimbursement
, recoupment or set-off
So, if the employee goes to the labor board, they will investigate and can fine you and also may mandate you pay 3 times the amount owed to the employee
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