An employer has the right to make many types of deductions from an employee’s pay. These deductions include the cost of work-specific uniforms, tools, meals, lodging, and more. For anything that is for the employee’s benefit, the employer must first get the employee’s consent before providing the good or service and deducting the cost of the employee’s pay. However, there are limits on what employers can deduct from pay. To learn more about deductions from pay, read below:
You’re probably already familiar with deductions for payroll taxes and Social Security, but there are a growing number of deductions which employers can legally withhold from your paycheck. However, only certain types of deductions can be legally withheld, and even then, the amount and/or percentage of the deduction is often limited by federal and state laws. Other types of withholding can be legally withheld only with your written permission and cannot be deducted if you have not authorized the deductions.
An employer may only make a deduction that is either:
legally authorized; or
voluntarily authorized by the employee and for the employee, not the employer’s, benefit
Some of the types of deductions which are authorized under federal and state law include: meals, housing and transportation, debts owed the employer, debts owed to third parties (through the process of garnishment); debts owed to the government (such as back taxes and federally-subsidized student loans), child support and alimony.
An employer is allowed to deduct certain items from an employee’s paycheck if the employee has voluntarily authorized the deduction in writing. Examples of such deductible items are union dues, charitable contributions, or insurance premiums. These deductions are allowed even if the amount received by the employee after deduction falls below the minimum wage.
However, an employer generally cannot deduct any items considered to be for the benefit or convenience of the employer, if it would cause the employee’s salary to be reduced below the minimum wage. Some examples of items which would be considered to be for the benefit or convenience of the employer are:
uniforms required by the employer that can only be worn on the job,
tools used in the employee’s work,
compensation for damages to the employer’s property by the employee or any other individuals,
compensation for financial losses due to clients/customers not paying bills, and
compensation for theft of the employer’s property by the employee or other individuals.
Employees may not be required to pay for any of the cost of such items if, by so doing, their wages would be reduced below the required minimum wage or overtime compensation. This is true even if an economic loss suffered by the employer is due to the employee’s negligence.
A variety of federal laws cover the different types of deductions that can be made from your paycheck. The Fair Labor Standards Act (FLSA) specifically limits deductions to prevent you from earning less than the minimum wage and/or any overtime pay due you. For more information on who is covered by the FLSA, see our site’s minimum wage page. Title III of the Consumer Credit Protection Act (CCPA) limits the amount of an employee’s earnings that may be garnished and protects an employee from being fired if pay is garnished for only one debt. For more information, see question 8.
Since a variety of federal laws cover the different types of deductions that can be made from your paycheck, whether your employer is covered depends on which law is at issue.
Employers whose enterprises are covered by the FLSA, or who have employees engaged in interstate commerce, are required by the FLSA to pay the minimum wage, and therefore generally cannot make deductions reducing your pay below the minimum wage.
Title III of the CCPA applies to all employers and individuals who receive earnings for personal services (including wages, salaries, commissions, bonuses and income from a pension or retirement program, but ordinarily not including tips).
Under the federal Family Support Act of 1988, all new or modified child support orders include an automatic wage withholding order, which requires employers to deduct child support from the wages of employees with alimony and/or child support obligations.
Other types of withholding, such as withholding for student loans and unpaid federal and taxes, are subject to the laws governing those kinds of payments, as discussed in more detail below.
No. Employers are allowed to provide meals to their employees and may deduct the cost of the meals that are supplied from an employee’s paycheck, even if the deduction reduces the employee’s pay to below minimum wage. The employer cannot charge the same amount charged to the public for meals, however, as the amount deducted must reflect the cost to the employer without making any profit. Some employees may value being able to eat the employer’s food for cost and may choose to have that cost deducted from their paychecks, because it is more convenient to do so.
However, this type of deduction must be voluntary. If the employee does not choose to take advantage of this benefit, then the deduction cannot be made. To reduce the administrative burden on your employer, you may offer to arrange in advance how often, if at all, you will eat on the job.
Employers are allowed to provide living quarters to their employees and may deduct the cost of the meals that are supplied from an employee’s paycheck, even if the deduction reduces the employee’s pay to below minimum wage. The employer cannot charge the same amount charged to the public for use of the resort facility, however, as the amount deducted must reflect the cost to the employer without making any profit. Some employees may value being able to stay in on-site living quarters at cost, and may choose to have that cost deducted from their paychecks, because it is more convenient to do so. Similarly, the employer may arrange for transportation and charge employees the actual cost of transportation, rather than the market value.
However, if the facilities or transportation are for the employer’s benefit, they may not be credited against the minimum wage. For example, if an employer requires employees to sleep on-site so that they can take emergency calls, the cost of your lodging may not be credited against the minimum wage. Or if you offer to arrive at the facility by making your own transportation arrangements, but the employer does not allow this because they want to conduct training along the way, then the transportation is for the employer’s benefit and cannot be credited against the minimum wage. (If work-related business is transacted during the trip, you may also be entitled to be paid for travel time. See our site’s work time page for additional information.)
No. Any deductions other than income taxes and court-ordered payments require your written authorization. If you agreed in writing about the payment amount, that agreement is binding on both you and your employer, according to the state laws which govern written contracts. If you did not agree in writing, then the employer cannot make the deduction at all.
Borrowing money from one’s employer, however, is generally a bad idea, for this very reason. Your only remedy, even though the employer has violated the law, is to go to a federal or state labor agency or to small claims court. Although you are legally protected if your employer attempts to retaliate against you, it still may place you in a very uncomfortable situation. After speaking with a government agency and/or a local attorney, you must make the determination whether it is worth it to challenge your employer, or to pay the money back more quickly, even though it imposes a financial hardship.
A wage garnishment occurs when an employer withholds the earnings of an individual for the payment of a debt as the result of a court order or other equitable procedure. Before your wages can be garnished, your creditor, in this case the city or parking authority, must first sue you for the unpaid amount, and obtain a court judgment against you, before your wages can be garnished. (If you were not aware that a court judgment had been ordered against you, you should consult with an attorney immediately to determine whether that judgment against you is legally binding.)
Title III of the Consumer Credit Protection Act (CCPA) limits the amount of an employee’s earnings that may be garnished in any one week. The employer can charge a minimal fee for administration costs relating to the garnishment. Title III protects employees by limiting the amount of earnings that may be garnished in any workweek or pay period to the lesser of:
twenty-five percent of disposable earnings
or the amount by which disposable earnings are greater than 30 times the federal minimum hourly wage (currently $7.25 per hour)
“Disposable earnings” refers to the amount of earnings left after legally required deductions (e.g., federal, state and local taxes, Social Security, unemployment insurance and state employee retirement systems) have been made. Deductions not required by law (e.g., union dues, health and life insurance, and charitable contributions) are not subtracted from gross earnings when the amount of disposable earnings for garnishment purposes is calculated.
For example, if you make $1000 per week, and have 40% of that amount withheld for legally required deductions, then your disposable earnings are $600 per week. Of that, $150 (25% of disposable earnings) can be garnished, as it is lower than the alternative amount which can be deducted (30 times $7.25 equals $217.50, which when subtracted from $600, leaves $382.50 subject to withholding but this amount is greater than the $150 from the alternative calculation.)
Title III specifies that garnishment restrictions do not apply to bankruptcy court orders and debts due for federal and state taxes. Some states have their own laws on wage garnishment. If a state wage garnishment law differs from Title III, the employer must observe the law resulting in the smaller garnishment. Title III also prohibits employers from discharging an employee because their earnings have been subject to garnishment for more than one debt.
If you still have questions about your state’s laws relating to wage garnishment, then you may wish to contact the agency in your state which handles wage and hour/labor standards violations, listed on our site’s state government agencies page, or an attorney familiar with this area of the law.
When you receive a notice of wage garnishment, you should also be provided with information about what you can do to protest the garnishment. You should be provided with a procedure by which you can file a court document and receive a hearing. At that hearing, you can present evidence of your expenses to a judge, who will then make a determination whether to terminate and/or lower the garnishment amount, or to let it remain as is.
If this is the first time a garnishment has happened, your employer cannot fire you solely on that basis. Title III of the Consumer Credit Protection Act (CCPA) prohibits an employer from discharging an employee because his or her earnings have been subject to garnishment for any one debt, regardless of the number of levies made or proceedings brought to collect it. Title III does not, however, protect an employee from discharge if the employee’s earnings have been subject to garnishment for a second or subsequent debt. Also, the CCPA does not prevent your employer from firing you for other reasons: however, the termination cannot be based solely on the garnishment.
Some states have their own laws on wage garnishment. If a state wage garnishment law differs from Title III, the employer must observe the law prohibiting the discharge of an employee because his or her earnings have been subject to garnishment for more than one debt (as opposed to the single debt protection offered under federal law).
If you still have questions about your state’s laws relating to wage garnishment, then you may wish to contact the agency in your state which handles wage and hour/labor standards violations, listed on our site’s state government agencies page, or an attorney familiar with this area of the law.
The IRS can take most – but not all – of your wages if you owe for back taxes and have not paid them. Unlike other forms of wage garnishment, the employer does not have to get your permission first, and is liable to the IRS for amounts paid to you instead of the amount that was supposed to be applied to the tax levy.
The amount withheld is determined based on the number of your dependents and the standard deduction to which you are entitled. When your employer receives notice of the wage levy, you should be given a copy of the notice immediately. On the back of the levy notice is an exemption claim form, where you designate the number of dependents and deductions. This form must be returned to the IRS within three days of when you receive it. If you do not return the form, the law authorizes your employer to pay you only $116 per week, and remit all of the rest to the IRS, until the taxes are paid in full or the collection period (ten years from when the taxes were assessed) expires.
If you owe state and/or local taxes, your wages may also be garnished by those agencies, which may act even more quickly than the IRS to seize back taxes. State laws vary, and may have different limits as to what percentage of your income may be withheld.
If you fail to make required payments under a government-issued student loan, the federal Department of Education or your state’s loan guaranty agency may issue a withholding order, which requires your employer to withhold wages, up to a certain amount, for loan payments.
The amount that may be withheld depends on the agency issuing the withholding order. Up to 15 percent of an employee’s disposable pay may be withheld to repay an unpaid student loan under a Department of Education garnishment order. In contrast, up to 10 percent of an employee’s disposable pay may be withheld to satisfy a garnishment order issued by a state student loan guaranty agency. “Disposable pay” refers to employee compensation after legally required deductions. The maximum amount that multiple holders of defaulted student loans may garnish any one employee is governed by the 25-percent limit set forth in the Consumer Credit Protection Act.
Before withholding can take place, you must receive 30 days’ prior written notice from the federal or state agency informing you of the nature of the student loan obligation and the agency’s intention to collect the debt through pay deductions. At this point, you may avoid withholding by entering into a written agreement that sets forth a payment schedule for repayment of the loan.
The only ground by which you can object to the garnishment is if you had been fired or laid off within the last twelve months, and are just returning to work. Unless the total of all garnishments exceeds 25% of disposable earnings, any questions regarding such garnishments should be referred to the agency initiating the withholding action.
Under the federal Family Support Act of 1988, all new or modified child support orders include an automatic wage withholding order. This wage withholding requirement does not apply to alimony-only orders, but does apply to combined alimony and child-support orders. Employers can be held liable for failing to comply with a child support order.
When you modified your child support order, you were required to pay support in the newly-determined amount. To ensure that this order will be enforced, your employer was sent a copy of the new order, and will make the appropriate amount of withholding and send it to your former spouse. This will be done on your behalf for your current child support order, and if there are any arrearages, those will be deducted as well, according to a formula based upon your current income and other withholding.
In court orders for child support or alimony, up to 50 percent of an employee’s disposable earnings may be garnished if the employee is supporting a current spouse or child, and up to 60 percent if the employee is not doing so. An additional five percent may be garnished for support payments over 12 weeks past due.
Employees can opt out of required withholding if both the employee and his or her former spouse agree. However, even if you have opted-out, your employer may be required to start withholding if you do not make the agreed payments on time. A majority of required child support payments are now made this way (as the law has been in effect since 1994), so it should not present a problem with your employer or payroll service, who is most likely already familiar with the law’s requirements after complying with withholding requirements for other employees. Under the laws of most states, your employer cannot discriminate against you (by firing you, disciplining you, or refusing to hire you) because you have a child support wage withholding order.
If you still have questions about your state’s laws relating to child support withholding, then you may wish to contact the agency in your state which handles wage and hour/labor standards violations, listed on our site’s state government agencies page, or an attorney familiar with this area of the law.
If you are subject to multiple withholding orders, the employer will apply these in the following order.
Tax levies. Federal tax levies should be satisfied before all other orders for deductions of pay, unless a child support orders was received by the employer prior to the tax levy.
Child support orders. Child support orders should be satisfied before garnishments and student loan collections, but generally do not take precedence over tax levies, unless the child support order was received by the employer prior to the tax levy, or if the IRS instructs the employer to satisfy all child support orders first, regardless of when the employer received the order.
Garnishments. Garnishments should be satisfied only after tax levies and child support orders have been satisfied.
Student loans and other federal government agency garnishments. No official guidance exists on what priority to give student loans and other federal government agency garnishments. However, it is likely that tax levies and child support orders will take priority. Employers processing student loan and other federal agency garnishments should contact the issuing agency if questions regarding priority arise.
Note: State laws will govern the treatment of state tax levies and multiple child support orders.
Many workplaces have instituted charitable giving campaigns. For the employee’s convenience and ease of collection, some employers allow their employees to have the amount of their contribution deducted from their paycheck. However, any deductions made from your paycheck must be voluntary, and authorized by you in writing. Your employer is not legally allowed to make a deduction for charitable giving purposes that you did not authorize.
If a charitable contribution has been withheld without permission, you may first want to check to see with your company’s HR department, to find out the company’s basis for withholding a contribution. (You might have authorized a deduction without realizing it.) However, if you did not authorize the contribution, and the company refuses to refund the amount of the contribution, you may wish to consider filing a complaint with a federal or state administrative agency. However, given the amount and the potential political fallout from making a challenge of this nature, you may wish to work with your company to attempt to reform the process by which your employer solicits charitable contributions, so that all employees’ contributions are truly voluntary.
Surprisingly, the answer may be no, depending on what you make. The only requirement under federal law is that if the employer chooses to have you bear the cost of the uniform, the deduction cannot take your pay below the minimum wage and/or reduce your overtime compensation.
For example, if an employee who is subject to the statutory minimum wage of $7.25 an hour is paid an hourly wage of $7.25, the employer may not make any deduction from the employee’s wages for the cost of the uniform nor may the employer require the employee to purchase the uniform on his/her own. However, if the employee were paid $7.60 an hour and worked 30 hours in the workweek, the maximum amount the employer could legally deduct from the employee’s wages would be $10.50 ($.35 X 30 hours).
However, if you make more than the minimum wage, so that the deduction does not take your pay below the minimum wage, the employer is legally entitled to deduct the cost of the uniform from your pay, even if the uniform can only be worn at work and the cost and maintenance of the uniform is completely for the employer’s benefit.
For example, if the employee is paid an hourly wage of $9.25 per hour and worked 30 hours in the workweek, the maximum amount the employer could legally deduct from the employee’s wages would be $60.00 ($2.00 X 30 hours), so a $25.00 deduction for uniform replacement would be allowed under law.
Some states have laws which more narrowly limit the deductions which may be taken for uniforms and/or other work-related items used for the employer’s benefit. If you still have questions about your state’s laws relating to uniform deductions, then you may wish to contact the agency in your state which handles wage and hour/labor standards violations, listed on our site’s state government agencies page.
The test for whether clothing is considered a uniform, and therefore subject to the requirement that your compensation not dip below minimum wage once the deduction is made, only applies when a particular garment is not what would normally be considered “street clothes.”
Generally, any ordinary street clothing where variation in detail is permitted is not considered to be a uniform. The questions to ask is whether this is the kind of garment you could wear outside of work, and whether there can be some variation in brand name, detail, style, etc.
So if any white shirt (or even any collared white shirt) and any black slacks (no matter the style, fit, or manufacturer) would do and these are the kinds of items that you could wear outside of work for another purpose, this most likely would not be considered a uniform. However, rather than purchasing the item from your employer, you may wish to shop around and see if there is a more affordable alternative.
Some states have laws which more narrowly limit the deductions which may be taken for uniforms and/or other work-related items used for the employer’s benefit. If you still have questions about your state’s laws relating to uniform deductions, then you may wish to contact the agency in your state which handles wage and hour/labor standards violations, listed on our site’s state government agencies page.
Again, you may be surprised to learn that the answer may be no, depending on what you make. The only requirement under federal law is that if the employer chooses to have you bear the cost of the cash register shortage, the deduction cannot take your pay below the minimum wage and/or reduce your overtime compensation.
For example, if an employee who is subject to the statutory minimum wage of $7.25 an hour is paid an hourly wage of $7.25, the employer may not make any deduction from the employee’s wages for the cash register.
However, if you make more than the minimum wage, so that the deduction does not take your pay below the minimum wage, the employer is legally entitled to deduct the cost of the cash register shortage from your pay.
For example, if the employee were paid $7.60 an hour and worked 30 hours in the workweek, the maximum amount the employer could legally deduct from the employee’s wages would be $10.50 ($.35 X 30 hours). If the employee is paid an hourly wage of $9.25 per hour and worked 30 hours in the workweek, the maximum amount the employer could legally deduct from the employee’s wages would be $60.00 ($2.00 X 30 hours), so the full $15.00 deduction for the cash register shortage would be allowed under law.
Some states have laws which more narrowly limit the deductions which may be taken for cash register shortages and other work-related items. If you still have questions about your state’s laws relating to deductions, then you may wish to contact the agency in your state which handles wage and hour/labor standards violations, listed on our site’s state government agencies page.
Similar to deductions for uniforms and cash-register shortages, the employer may be allowed to make this deduction. The only requirement under federal law is that if the employer chooses to have you bear the cost of the tools needed for your job, the deduction cannot take your pay below the minimum wage and/or reduce your overtime compensation. However, if you make more than the minimum wage, so that the deduction does not take your pay below the minimum wage, the employer is legally entitled to deduct the cost of the cash register shortage from your pay.
Some states have laws which more narrowly limit the deductions which may be taken for required tools and other work-related items. If you still have questions about your state’s laws relating to deductions, then you may wish to contact the agency in your state which handles wage and hour/labor standards violations, listed on our site’s state government agencies page.
An employer may deduct nominal fees that an employee receives for jury duty, usually between $10 and $30 per day in states that provide them. However, an employer may not deduct any more pay from a salaried employee as long as the employee did some work during the workweek. For example, if an employee had jury duty for three days and then returned to work for two day, then the employee must receive all of their pay for that week, minus the nominal fee deduction. Or if the employee had jury duty all week but did some work from home the employee is also entitled to their full pay.
Hourly employees, on the other hand, do not have to be paid by their employer for jury duty.
Federal law does not require employers to provide employees with pay stubs; however, it is a customary practice that most employers voluntarily choose to follow.
However, the FLSA requires that every covered employer keep certain records for each covered, nonexempt worker. There is no required form for the records, but the records must include accurate information about the employee and data about the hours worked and the wages earned. The basic records that an employer must maintain are:
Employee’s full name and social security number;
Address, including zip code;
Birth date, if younger than 19;
Sex and occupation;
Time and day of week when employee’s workweek begins.
Hours worked each day and total hours worked each workweek.
Basis on which employee’s wages are paid;
Regular hourly pay rate;
Total daily or weekly straight-time earnings;
Total overtime earnings for the workweek;
All additions to or deductions from the employee’s wages;
Total wages paid each pay period;
Date of payment and the pay period covered by the payment.
Employers are required to preserve payroll records, collective bargaining agreements, sales and purchase records for at least three years. Records on which wage computations are based should be retained for two years, i.e., time cards and piece work tickets, wage rate tables, work and time schedules, and records of additions to or deductions from wages. The records may be kept at the place of employment or in a central records office.
As the employer is required to make these records available for inspection by the Department of Labor, if your employer is making incorrect deductions which are the basis of a complaint you have filed, the employer may be asked to make the records available as part of the investigation of your complaint.
The FLSA and Title III of the Consumer Credit Protection Act (CCPA) are enforced by the Wage-Hour Division of the U.S. Department of Labor. Wage-Hour’s enforcement of FLSA and CCPA are carried out by investigators stationed across the U.S., who conduct investigations and gather data on wages, hours, and other employment conditions or practices, in order to determine whether an employer has complied with the law. Where violations are found, they also may recommend changes in employment practices to bring an employer into compliance.
It is a violation to fire or in any other manner discriminate against an employee for filing a complaint or for participating in a legal proceeding under FLSA or CCPA.
For willful violations of the FLSA, the violator may be prosecuted criminally and fined up to $10,000. A second conviction may result in imprisonment. Employers who willfully or repeatedly violate the minimum wage requirements are subject to a civil money penalty of up to $1,000 for each such violation.
The FLSA makes it illegal to ship goods in interstate commerce which were produced in violation of the minimum wage, overtime pay, child labor, or special minimum wage provisions.
For willful violations of the CCPA, the violator may be prosecuted criminally and fined up to $1,000, or imprisoned for not more than one year, or both.
To contact the Wage-Hour Division for further information and/or to report a potential FLSA or CCPA violation, call:
Toll Free: (866) 4USWAGE (866-487-9243)
TTY: (877) 889-5627 (available Monday-Friday 8 a.m. to 5 p.m. Eastern Time)
You may also contact your local WHD office.
If you need further information about your state’s wage garnishment or other wage deduction law and/or wish to report a potential state law violation, then you may wish to contact the agency in your state which handles wage and hour/labor standards violations, listed on our site’s state government agencies page.
There are several different methods under the FLSA for an employee to recover unpaid wages (which includes unlawful withholding which takes an employee’s pay below the minimum wage); each method has different remedies.
Wage-Hour may supervise payment of back wages.
The Secretary of Labor may bring suit for back wages and an additional penalty, called “liquidated damages,” which can be equal to the back pay award (essentially doubling the damages) if an employer willfully violated the statute.
An employee may file a private lawsuit for back pay and an equal amount as liquidated damages, plus attorney’s fees and court costs. An employee may not bring a lawsuit if he or she has been paid back wages under the supervision of Wage-Hour or if the Secretary of Labor has already filed suit to recover the wages.
The Secretary of Labor may obtain an injunction to restrain any person from violating FLSA, including the unlawful withholding of proper minimum wage and overtime pay.
Violations of Title III of the CCPA may result in reinstatement of a discharged employee, payment of back wages, and restoration of improperly garnished amounts. Where violations cannot be resolved through informal means, the Department of Labor may initiate court action to restrain violators and remedy violations.
Your state law may have different methods for redressing wage garnishment and other withholding violations, and different remedies to be awarded to those who succeed in proving a violation. For further information, please contact the agency in your state which handles wage and hour/labor standards violations, listed on our site’s state government agencies page.
Do not delay in contacting the WHD or your state agency to file a claim. There are strict time limits in which charges of unpaid wages must be filed. To preserve your claim under federal law, you must file a lawsuit in court within 2 years of the violation for which you are claiming back wages, except in the case of an employer’s willful violation, in which case a 3-year statute applies. However, as you might have other legal claims with shorter deadlines, do not wait to file your claim until your time limit is close to expiring. You may wish to consult with an attorney prior to filing your claim, if possible. Yet if you are unable to find an attorney who will assist you, it is not necessary to have an attorney to file your claim with the state and federal administrative agencies.
Your state law may have different deadlines for filing a complaint about wage garnishment and other withholding violations. For further information, select your state from the map below or from this list.
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