As all employees know, there can be a huge difference between the amount you earn and the amount that winds up in your pocket or bank account. Take a quick look at your pay stub and you’ll likely see several deductions that reduce your gross wages to the lesser “net” sum that appears on your paycheck. But not all deductions are created equal. While most are either allowed or required by law, some employers may try to profit from their workers and cheat them out of wages and overtime pay by taking unlawful deductions from their paycheck. When that happens, it is wage theft, and it is against the law.
What Are Legitimate and Legal Paycheck Deductions?
If you are paid as an employee and not as an independent contractor, your employer can and will deduct specific amounts from your pay for one of two valid reasons:
- The deduction is required or allowed under state or federal laws such as the Fair Labor Standards Act (FLSA) and Michigan’s Payment of Wages and Fringe Benefits Act (PWFBA);
- You have voluntarily agreed to the deduction.
Common examples of legitimate and legal deductions required or allowed by law include:
- Federal and state income tax withholding.
- Social Security and Medicare taxes.
- Certain meal, housing, and transportation expenses.
- Debts owed to the employer for such items as pay advances, student loans, or wrongfully appropriated funds.
- Court-ordered wage garnishments.
- Child support and alimony payments.
- Overpayment of wages or benefits, under certain conditions.
Voluntary and agreed-upon deductions can include deductions for:
- Contributions to retirement plans.
- Insurance premiums.
- Union dues.
- Charitable contributions.
What Are Unlawful Deductions?
Employers may try to reduce their expenses and increase their profits by making employees pay for items that the employer should rightfully cover. Generally, the FLSA, as well as corresponding state labor laws, prohibit deductions that are primarily for the benefit or convenience of the employer when those deductions result in the employee receiving less than the applicable minimum wage.
Perhaps the most common unlawful deductions relate to charging employees for uniforms, tools, equipment, or other items necessary or required for the performance of their jobs. While employers can, in fact, make employees pay for such things so long as they give them appropriate notice, they cannot do so if it reduces the employee’s pay below minimum wage or the applicable overtime wage. The same goes for deducting the costs of damage to company equipment or customers leaving without paying for goods or services.
Don’t Let Your Employer Cheat You Out of Wages. Contact the Overtime Pay Attorneys for a Free Consultation.
If you believe that your employer is taking money from your paycheck improperly, the law provides remedies including filing a civil lawsuit against your employer in state or federal court. Meeting with an experienced wage and overtime pay attorney is the best way to understand your options and ensure that you receive every penny you’ve earned.