Improper Deductions

Aside from court-ordered and government-required deductions, employers may only deduct authorized and lawful amounts from worker paychecks. If an employer makes improper and unauthorized deductions, that is a form of wage theft. Employers can be held liable and subject to civil and potentially criminal penalties for violations of federal and state laws. Improper deductions can be direct or indirect. A direct deduction happens when money is taken from the paycheck; an indirect deduction happens when an employer requires that a worker make payments. It makes no difference whether you pay your employer directly or whether you are forced to pay out of pocket.

If you think your employer is making improper deductions, consult with a workers’ rights attorney like those at Herrmann Law. You might be able to bring legal action against your employer and recover your lost wages and other money damages.

As an example of what is proper and improper, the Minnesota Department of Labor and Industry recently issued a bulletin setting out the rules for what is allowed as wage deduction from an employee paycheck. As stated in the Bulletin, generally, employers CANNOT deduct from an employee’s wages for:

• Faulty workmanship
• Loss
• Theft
• Damage to the employer’s property or the workplace
• General debts
• And more

Under the Minnesota rules, employers may ONLY deduct from wages if there is a voluntary and written authorization from the employee. Even then, certain conditions apply. For example, if there has been a loss, then a wage deduction may be taken if the employee signs (i) a written authorization (ii) AFTER the loss has occurred and (iii) which states the amount to be deducted from each paycheck. See Minn. Stat. 181.79. A slightly different rule applies if the employer makes a loan to the employee (for store merchandise, for example). Under those circumstances, the written authorization may be obtained in advance. If the loan is for purchased or rented equipment or uniforms, employers may not deduct more than $50 from an employee’s wages total.

Some states like New York, Indiana, Oregon and others are even more restrictive and do not allow employer deductions unless the deduction is for the benefit of the employee and is authorized in writing. Examples of benefit-for-the-employee deductions would be for monthly health insurance premiums or payments into a retirement fund. Thus, like Minnesota, these states would not allow a wage deduction for faulty workmanship or for damage/loss. Moreover, these states would not allow deductions to correct an overpayment of wages.

In most states and under federal law, even if the wage deduction is permitted, the deduction cannot take the employee below the state (or federal) minimum wage. Thus, if a worker makes $8.00 an hour and works 40 hours per week but has $20 per week deducted for uniform rental, then the actual hourly rate is $7.50. If $7.50 is less than the state or city minimum wage, then the employer cannot deduct for uniform rental.

Call the Employee Rights Attorneys at Herrmann Law Today

If you think that your employer has been making unlawful deductions, or if you think your employer has engaged in other forms of wage theft, call the Employee Rights attorneys at Herrmann Law. We are proven, experienced, employee-focused attorneys representing workers across the United States in all types of workplace disputes. Use our Online Contact page or call us at (817) 479-9229.