The Wage and Hour Division of the U.S. Department of Labor is responsible for enforcing federal labor laws, including laws regarding the minimum wage and overtime.

Both federal and state payroll deductions laws prohibit employers from making wage deductions that are illegal. If an employer has made illegal deductions from an employee’s wages, the employer may file a complaint. The complaint can be filed with the department of labor in the state where the employee lives or with the United States Department of Labor. If the complaint is resolved in the employee’s favor, the employee may recover the amount of money that was illegally deducted.

What Can an Employer Deduct from Your Wages?

The law requires an employer to take certain deductions from an employee’s wages. Required deductions of wages include those for income tax withholding, and Social Security and Medicare taxes. An employer must also take deductions for state and local taxes as required by law.

Other required deductions include deductions for court-ordered obligations such as alimony and child support. In addition, an employer must garnish an employee’s wages, if required by a court order. The garnished money is then used to pay the employee’s creditors.

Employees are entitled to receive overtime pay calculated at least time and one-half times pay for all time worked past forty hours a week. Some exemptions to this rule apply to public service agencies or to employees who meet certain requirements in accordance to their job duties along with a salary of no less than $455 a week.

Again, these rules can vary from state to state and may be implemented differently depending on jurisdiction. State laws can provide more, but not less protection than federal guidelines. If you have any questions regarding employer deductions or other related employment law issues, you should contact an attorney in your area. They will be able to research the laws in your area and determine what your legal rights and options are under the law.

Can an Employee Authorize Wage Deductions?

A number of deductions are voluntary. This means that the employee can choose whether to authorize them. Employees may choose to authorize deductions for a variety of items. These items might include health insurance premiums, 401(k) contributions, union dues or charitable contributions.

Some employers allow loans or advances to employees. Employees may authorize deductions for the purpose of repaying loans or advances.

Employees who authorize voluntary deductions usually must consent to these deductions in a written document that outlines the amount to be deducted per pay period. The employer is generally not permitted to make a deduction in the absence of an employee’s written consent to a deduction.

What are Examples of Illegal Wage Deductions?

Some employers reduce their employees wages by failing to pay them the overtime pay to which they are entitled by law. Employees are entitled to receive overtime pay calculated as one and a half times their standard hourly wage for all hours over 40 worked in a week. Some exemptions to this overtime rule apply to public service agencies or to employees who meet certain requirements in accordance to their job duties along with a salary of at least $455 a week.

Other illegal deductions include the following:

    • Taxes that the employer is required to pay: Employers generally must pay the federal unemployment tax, known as FUTA, as well as state unemployment taxes. It is illegal for the employer to try to shift payment of these taxes to employees;

 

    • Workers’ compensation premiums: Employers cannot shift the cost of workers’ compensation premiums on to employees; employers are responsible for paying workers’ compensation insurance premiums;

 

    • Below minimum wage: Deductions that bring an employee’s earnings below the minimum wage as provided for in the federal Fair Labor Standards Act (FLSA) are not allowed;.

 

  • Deductions to cover the cost of OSHA-required equipment; Deductions for virtually all types of personal protective equipment (PPE) employees are required to wear under the federal Occupational Safety and Health Act.

Some states permit certain deductions, while other states prohibit the same deductions. Examples of some deductions that are allowed in some states and disallowed in others include:

 

    • Required uniforms: Deductions for the cost of a uniform that an employee is required to wear.

 

    • Cash register shortages: Many states permit deductions for cash register shortages attributable to the employee.
        • California does not permit such deductions unless the employee was grossly negligent.

       

      • In New York, an employer cannot deduct compensation for cash register shortages, even if it can be proven that the employee was the only person with access to the cash drawer.

 

  • Employer-mandated trainings and seminars: If an employer requires an employee to incur certain expenses, such as the cost of a training or seminar, the employer must pay for it. The employer cannot deduct the cost from the employee’s wages or salary.

What Can I Do if My Employer Has Made an Illegal Payroll Deduction?

The United States Department of Labor is responsible for enforcing federal labor and employment laws. Individuals who have been subjected to deductions that are illegal under federal law, may file a complaint with the Wage and Hour Division of the United States Department of Labor. The Department of Labor maintains a list of Wage and Hour Division local offices.

Individuals who have been subjected to deductions under state law may contact their state’s Department of Labor. State Departments of Labor typically have local offices. A county may have its own local office. A major metropolitan area may have its own local office.

In instances where illegal deductions have been made both under state and federal law, the United States Department of Labor and the state Department of Labor should be contacted.

Can I Face Retaliation if I File an Illegal Wage Deduction Complaint?

Generally, both federal and state law prohibit an employer from retaliating against an employee who files an illegal wage deduction complaint. The retaliation might take the form of firing, demoting, or suspending the employee in response to the employee’s filing the complaint of an illegal deduction. An employee may file another complaint alleging retaliation if they believe their employer has retaliated against them for a claim of illegal wage deduction.

In other words, an employee should be able to file a report for an illegal wage deduction without fear that they will lose their job, miss a promotion, or suffer other consequences for filing the report. This applies to reports that are filed internal, such as through human resources departments, or externally, such as with a government agency.

Do I Need a Lawyer to File a Complaint for an Illegal Wage Deduction?

Filing an illegal wage deduction complaint can be a complicated process. You may wish to contact an employment law attorney for assistance. An employment law attorney can review the facts of your claim and can assess whether federal or state laws have been violated. The attorney can file complaints with the appropriate government entities on your behalf. If needed, they can also represent you at legal proceedings. These proceedings include hearings, arbitrations, mediations, or trials.