What Your Employer Is and Isn’t Allowed To Deduct From Your Paycheck

There Are Strict Rules Employers Must Follow

Have you ever received a paycheck and it was a lot less than you expected? Just what are all those deductions your employer is making from your paycheck—and is this allowed? The answer is that it depends. There are strict rules about what an employer can and cannot deduct from your paycheck.

What Does the Law Say?

Under the law, deductions have to fall under one of these two categories:

• The deduction is legally authorized, or
• The deduction is voluntarily authorized by the employee, and for the employee’s benefit, not the employer’s.

The federal law states that employers may deduct some specific expenses from employee paychecks—but even if the deductions are allowed, your earnings can’t fall below the minimum wage. Here’s what the law says about various deductions employers make.

Paying for uniforms. Employers are allowed to deduct the cost of your uniform—including laundering costs—under federal law, as long as that expense doesn’t bring your paycheck below the minimum wage.

It’s sometimes not allowed at the state level, however. In New Jersey, employers are not allowed to deduct wages for a uniform that displays the company logo or otherwise can’t double as streetwear. Other states make this deduction illegal across the board—if the company wants employees to wear uniforms, the company has to buy them.

Under Pennsylvania law, it’s not explicitly stated whether employers are allowed to deduct wages for uniforms. However, the law in Pennsylvania says that all employee deductions have to be for the employee’s benefit, not the employer’s—so it’s broadly believed that uniforms would not fall under the permissible category.

Paying for tools and equipment. Generally, federal law allows deductions for tools and equipment, as long as it doesn’t bring your pay below minimum wage—but some states don’t allow this. In Pennsylvania, it’s generally thought not to be allowed for the same reason as uniforms. In New Jersey, such deductions are broadly not allowed.

Paying for shortages at the cash register or broken items. This is also allowed at the federal level as long as it doesn’t bring your pay below minimum wage; but it’s disallowed in some states. In New Jersey, such deductions are explicitly not allowed; in Pennsylvania, they are assumed to not be allowed because such deductions don’t benefit the employee.

Paying for meals and lodging. At the federal level, employers are allowed to deduct for meals and lodging—in fact, some restaurants deduct the cost of one meal per shift. Unlike most other deductions, employers can make these deductions even if it means you’re being paid less than the minimum wage.

There are some limits, however. Employers are only allowed to do this if the meals and lodging are for the benefit of the employee, and only if this is a customary thing in the industry. In addition, the employer is permitted only to deduct “reasonable cost,” not the same price it would charge a customer. Some state laws adhere to the same rules, but others set more stringent limits.

What Paycheck Deductions Are Not Allowed?

While some deductions are allowed at the federal level but not allowed based on various state statutes, some are broadly unlawful even in most states. These include:

• Deductions as a disciplinary measure. Your employer is generally not allowed to deduct money from your paycheck as a type of punishment or retaliation.
• Direct deposit costs. Your employer must offer you at least one free way to receive your pay, under federal law.
• Regular business expenses. In general, employers may not deduct what is considered a regular business expense from employee paychecks.
• Workers’ comp premiums. Generally, employers are not allowed to deduct workers’ compensation premiums from employee paychecks.
• Pre-employment medical or physical exams. It is broadly unlawful for employers to deduct the cost of medical or physical exams that an employee takes as part of the employment process from that employee’s paycheck.

Are You Seeing Illegal Deductions on Your Paycheck? Consult an Attorney 

If you believe your employer is unlawfully taking deductions from your paycheck, you should speak to a knowledgeable employment attorney. Your attorney can help you get restitution and hold your employer accountable.

Call us at 267-273-1054 or email us at murphy@phillyemploymentlawyer.com for a free, confidential consultation today. 

The information provided here does not constitute legal advice. It is intended for general purposes only. If you have questions about a specific legal issue, you should speak to an attorney.