The law required that employers take certain deductions from their employee’s wages. The required deductions of wages include deductions for:
Employers are also required to take deductions for state and local taxes as required by law. There may also be other required deductions for obligations that are court-ordered, including alimony and child support.
Additionally, employers are required to garnish an employee’s wages if a court order requires it. The money which is garnished from the employee’s paycheck is used to pay the employee’s creditors.
Eligibility: It is important to note that deduction rules usually cover most employees, but there are some carve outs. For instance, unionized workers may be treated differently if a collective bargaining agreement sets its own terms, and individual employment contracts can also create exceptions.
Whether someone is salaried or hourly can affect how deductions interact with minimum wage or final pay requirements. State specific labor laws also add another layer, so checking those is often necessary.
An employee is entitled to receive overtime pay which is calculated at the rate of at least time and one-half times their regular pay for any hours worked over forty hours in a work week. There are some exceptions to this rule which apply to public service agencies or to an employee who meets certain requirements according to their job duties along with a salary of no less than $455 a week.
These rules may vary from state to state and may be implemented differently depending on the jurisdiction. State laws are permitted to provide more but cannot provide less protection than the federal guidelines.
Additional Considerations
Process/Steps: If an employee thinks a deduction was made incorrectly, then their first step should be to review their pay stub and any employment documents to confirm what was authorized. They should then raise the issue with their employer in writing, explaining the discrepancy and asking for correction.
If the employer doesn’t resolve it, the next step is contacting the state labor department or the U.S. Department of Labor’s Wage and Hour Division to file a formal complaint.
Timelines: You should note that the length of a Department of Labor investigation isn’t fixed, and it’s often not quick. The timeline can shift based on how complicated the complaint is, how many cases the agency is already handling, and whether state or federal rules apply.
Some investigations wrap up in a few weeks, while others may take several months before a resolution is reached. Checking with the agency directly is usually the best way to get a more precise estimate.
Costs/Fees: Importantly, there’s no cost to file a wage deduction complaint with the Department of Labor. The process itself is free for employees. The agency handles these claims as part of its regular enforcement duties. The only potential expense would come from hiring a private attorney and filing a private lawsuit, which is optional and not required to pursue a complaint.
If an individual has any questions regarding employer deductions or other employment-related law issues, they should consult with an attorney in their area. Their attorney will be able to research the laws in their area and determine their legal rights under the law.
What Property or Items Should I Return to My Employer?
Whether an individual quits their job for various reasons or if they are terminated from their position, they will need to return any property belonging to their employer.
What property must be returned will vary depending upon the employee’s:
- Position;
- Job function; and
- Industry in which they work.
No matter the situation, failure to return company or employer property may result in serious consequences. If an individual signed an employment contract, that document might guide what property is required to be returned when the employee vacates their position.
There are some items which commonly belong to an employer, including, but not limited to:
- Key fobs, keys, or entrance badges;
- Identification badges;
- Parking permits;
- Equipment used to perform the job that they did not provide themselves, such as:
- computers;
- machinery;
- tools; and
- various other electronics;
- Uniforms or clothing which is provided by and required by the employer, such as shirts or hats;
- Documents or other work which the employee produced, especially if it is confidential in nature; and
- Products or prototypes produced by the company.
The best policy is to check with the company’s Human Resources department to determine what property should be returned upon departure and what property may be kept. This step will demonstrate that the employee is acting in good faith and may help avoid a dispute from arising in the future.
Can My Employer Deduct the Value of Unreturned Property From My Final Paycheck?
Federal employment laws permit employers to make paycheck deductions under certain circumstances. These circumstances include unreturned company property.
The only requirement for these deductions is that they cannot cause the individual’s pay to fall below the federal minimum wage. In addition, federal law does not require an employer to provide employees with their final paycheck immediately.
This means an individual’s employer may be permitted to withhold an employee’s final paycheck until they have returned all necessary company property. It is important to note that making a paycheck deduction or withholding a final paycheck may violate an employee’s state-specific paycheck laws.
Many states have laws that prohibit or restrict paycheck deductions, either in very specific circumstances or entirely. Most states also specify when an individual’s final paycheck must be provided.
For example, a state may require final paychecks to be given to employees within 30 days of their termination or resignation. A complete list of these requirements can be found on the Department of Labor’s website.
According to federal laws, an employer is also permitted to deduct broken or missing items from an individual’s paycheck. It is important to note that the specifics of these actions are subject to state law.
Numerous states require that an employer first obtain written consent before making a paycheck deduction for any reason. Other states do not permit deductions to be taken at all.
For example, in California, lost and damaged equipment is considered a cost of doing business. In California, deductions are only permitted if an employee behaves negligently or acts on purpose.
State Variations: Several states besides California also take a strict approach to wage deductions for unreturned property. Some require an employee’s written authorization before any deduction can be made, while others only allow deductions if the employer can show clear negligence or intentional misconduct.
A few states bar these deductions entirely unless a court judgment is involved. Because the rules vary widely, checking the specific state’s labor code or speaking with an employment attorney is often necessary to understand the exact limits.
It is important to note that even if an individual’s state prohibits paycheck deductions of any type, their former employer is still entitled to their property or equitable compensation for their property. Therefore, if an individual does not promptly return their employer’s property, their employer may have grounds to file a civil lawsuit against them.
Definitions: You should note that equitable compensation generally means a court ordered financial remedy meant to put the injured party back in the position they would have been in had the wrongdoing not happened. It’s used when fairness calls for a monetary award and other remedies don’t adequately address the harm. How it’s calculated and applied depends on the jurisdiction and the nature of the case.
In certain cases, an employer may also be able to take criminal action to ensure the prompt return of their company property, such as a company vehicle.
What Else Should I Know About Paycheck Deductions?
In some cases, an employer may charge an employee for the costs associated with necessary supplies, such as uniforms or tools. An employer may also deduct the cost of cleaning and maintaining uniforms and supplies.
Although these types of payroll deductions are not desirable, they are not entirely illegal. This, again, will vary by state according to the state’s employment and payroll laws.
As previously noted, a paycheck deduction cannot reduce an individual’s pay below the minimum wage. The federal minimum wage in the United States is $7.25 per hour.
Many states, however, have exceeded the federal minimum wage. Minimum wage laws do not apply to all employees, including those considered independent contractors.
Federal wage laws do apply to all employers. An employer should pay whichever law is more generous. In other words, if the state’s minimum wage is higher than the federal minimum wage, the employer should pay the state minimum wage.
Risks/Penalties: You should note that penalties for illegally deducting wages can range from financial to legal consequences. Employers may be required to repay the withheld wages, sometimes with added interest or statutory penalties.
Labor agencies can also impose fines or take enforcement action, and employees may also pursue civil lawsuits seeking additional damages. In more serious cases, repeated violations can trigger broader investigations into the employer’s wage and hour practices.
The Importance of Hiring a Lawyer: An employee can often resolve a wage deduction issue on their own when the situation is simple and the employer is willing to fix the mistake. This might include cases involving small amounts, clear misunderstandings, or deductions that plainly violate company policy or wage laws.
However, when the dispute is complicated, involves larger sums, or the employer refuses to cooperate, getting legal guidance becomes much more important.
How Do I File an Illegal Wage Deduction Complaint?
The Wage and Hour Division of the United States Department of Labor enforces federal labor laws, laws including those governing minimum wage and overtime. Both state and federal payroll deductions prohibit an employer from making illegal wage deductions.
If an employer has made illegal deductions from an employee’s wages, the employee may file a complaint. Their complaint may be filed with the Department of Labor in the state where the employee resides or with the United States Department of Labor.
Evidence/Documents: Proper evidence is crucial in succeeding in these complaints. In order to support a claim of an improper wage deduction, an employee should pull together anything that shows what they were paid, what was taken out, and what rules applied.
As noted above, pay stubs, the employment contract, and any company policies on deductions or returning property are key. It also helps to save emails or messages exchanged with the employer about the deduction, along with any records related to the item or issue the employer claims justified the deduction, such as receipts or photos.
If the complaint is resolved in the employee’s favor, the employee may recover the amount of money which was deducted illegally.
Do I Need an Attorney for Final Paycheck Deductions for Unreturned Property?
If your former employer withholds an amount of money from your final paycheck for property that you kept, you should contact an employment law attorney. An experienced employment law attorney will know the laws in your state governing these types of withholdings, whether they are permitted, and your rights and defenses, if applicable.
Your attorney can also file a wrongful termination lawsuit if you did not keep any of the property. Finally, your attorney can represent you at any court hearings or appearances.
