What Deductions Can Your Employer Take Out of Your Paycheck?
Employers have a right to make certain deductions from the employees’ paycheck. For example, the deductions may cover the cost of lodging, meals, work-specific uniform, tools, etc. Before deducting anything from the employee’s pay to cover the cost of a good or service that is solely for the employee’s benefit, the employer has to get the employee’s express permission first. Even so, there is a ceiling on what the employer can deduct from his employee’s pay. Every one of these deductions should be per the state and federal laws that regulate deductions.
There are several federal laws that provide for the various types of deductions employers can make from an employee’s paycheck. For example, Fair Labor Standards Act (FLSA) is designed to cushion employees from deductions that will leave them earning lower than the minimum wage or the overtime pay due to the said employee. Title III of the CCPA (the Consumer Credit Protection Act) limits the amount of the employee’s earnings which can be garnished. It also cushions the employee from being fired if the employee’s pay is garnished for just one debt.
According to the aforementioned federal laws, the employer is only permitted to make a deduction if the law authorizes or if the employee voluntary authorizes the deduction to cover a good or service meant for the employee (not the employer’s) benefit.
Federal law authorizes the following deductions: housing, meals, debts the employee owes employer, debts owed to third parties, government debts, child support and alimony.
The employer can make other deductions if the employee acquiesces in writing. For example, he can deduct charitable contributions, union dues, insurance premiums, etc. These deductions can still be made notwithstanding the fact that sometimes the amount remaining for the employee after the deduction is below minimum wage. However, it is noteworthy that the employer is not permitted to deduct anything to cover some items that are regarded as being for the convenience of the employee if such a deduction would lead to the unfortunate result of the employee’s pay falling below the minimum wage. Examples of such include tools used in the employee’s work, work-specific uniforms, etc.
But who is covered by the federal laws regulating deductions?
As already stated, there is a variety of federal laws which cover the various types of deduction which can be made from an employee’s paycheck. Therefore, different laws cover different types of employers. For example, employers whose businesses are regulated by the FLSA, or that have employees running interstate commerce, are expected by the FLSA to pay the minimum wage. Therefore, they can’t just make deductions reducing an employee’s wage below the permitted minimum.
Title III, on the other hand, covers all employers and individuals who get earnings for personal services.
As per the Family Support Act of 1988, child support orders entail an automatic wage withholding order requiring employers to deduct child support from the employee’s wages.
There are other types of withholding that are subject to federal laws that govern the respective payments.
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