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Deductions From Pay: What you need to know

What are deductions from pay? Deductions from pay are deductions taken directly from an employee's paycheck. The federal law on deductions from pay contains few restrictions when compared to the laws in many states. Under federal law, almost any deduction is permitted, even if it reduces the employee's pay below the minimum wage in some cases. Certain deductions may specifically reduce pay below the minimum. However, there are a number of deductions that may not be made if they result in pay that is less than the minimum wage. These rules apply only to nonexempt employees who are covered by minimum wage requirements. In general, deductions from pay should be made only where required by law or authorized in writing by the employee.
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Many states regulate wage deductions much more strictly than does the federal government. Accordingly, the rule that is most advantageous to the employee will control.
An employer may deduct the “reasonable cost” of providing the following items even if the employee's cash wage drops below the minimum wage:
Federal, state, and local taxes. The required withholdings for federal, state, and local taxes, including FICA, may reduce wages below the minimum wage. However, an employer may not deduct from the employee's wages taxes that the employer is required to pay.
Meals, lodging, and other facilities. The reasonable cost or fair value of meals, living quarters, or other facilities may be credited as part of the minimum wage. “Fair value” is not retail value; it may not include any profit to the employer or its associates. The employees must be told that these amounts are being deducted from ...

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Claim Your Free Copy of Top 100 FLSA Overtime Q&As

We’ve compiled a list of the 100 most commonly asked questions we have received on the federal Fair Labor Standards Act (FLSA) overtime regulations.
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This report, "Top 100 FLSA Q&As", is designed to provide you with an examination of the federal FLSA overtime regulations in Q&A format, including valuable tips for bringing your workplace into compliance in an affordable manner.

At the end of the report, you will find a list of state resources on wage and hour issues. This report includes practical advice on topics such as:
  • FLSA Coverage: How FLSA regulations apply to all employers and any specific exemptions from the overtime requirements
  • Salary Level: Qualifying for exemptions and nonexempt employees
  • Deductions from Pay: Deducting for violations, disciplinary reasons, sick leave, or personal leave

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