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.
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Download Now 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 their wages, and they must voluntarily accept the deductions. The facilities must be for the benefit of the employees. If they are for the employer's benefit, they may not be credited against the minimum wage. For example, if an employer gives employees supper money because it needs them to work overtime, that supper money may not be credited against the minimum wage.
Transportation provided by the employer. This may be credited against the minimum wage, but only if the travel time does not count as time worked and is not necessary to the employer.
Fuel and merchandise. Fuel for residential heating and cooking and general merchandise provided by company stores may be credited against the minimum wage, but only if they are reasonably connected to ...