Why is your take-home pay so much less than your hourly wage multiplied by your work hours? Because of deductions: amounts your employer is either required or allowed to withhold from your paycheck. Certain deductions are mandated by the federal or state government or by a court order. Others are voluntary, at the option of either you or your employer.
However, there are legal limits on voluntary deductions. The federal Fair Labor Standards Act (FLSA) requires employers to pay eligible employees at least the minimum wage for all hours worked. Voluntary deductions that reduce an employee’s pay below the minimum wage are prohibited, with a couple of exceptions. (To learn more about the FLSA in general, see our Wage and Hour FAQ.)
Employers are required to withhold certain amounts from employee paychecks. For example, employers must withhold income taxes, Social Security, and Medicare taxes from employee paychecks and pay these amounts to the IRS. Most states also impose an income tax, which employers must withhold from employee pay. State law might require additional withholding. In California, for example, a small amount from employee paychecks must go towards the state’s temporary disability program.
If you are subject to a wage garnishment order, your employer is required to withhold money from your paycheck and send it to the beneficiary of the order. If you owe child support, for example, a portion of your earnings can be withheld and sent to the child’s guardian. The law limits how much of your wages can be garnished, though. The limits depend on the reason for the garnishment, your earnings, and your state law. For more information, see our article on wage garnishment.
Deductions Your Employer Takes to Pay Itself
For non-mandatory deductions by your employer, the general rule is that your employer must leave you with at least the minimum wage. For example, under the FLSA, your employer can deduct the cost of your uniforms or work tools from your paycheck, but only if you would still receive at least the minimum wage per hour. Some states don’t allow these deductions, however. In California, for example, employers must pay for all items necessary for work, including tools and uniforms.
If you ask for a loan or an advance on future wages, your employer can withhold money from your paycheck to pay itself back. As an exception to the general rule, the FLSA allows employers to take these types of deductions even if you are left with less than the minimum wage. However, employers may not add administrative fees that will bring your take-home pay below the minimum wage. In some states, such as California, your employer must get your written consent before making the deduction.
Voluntary Deductions Requested by the Employee
If your take-home pay falls below the minimum wage because of deductions you have requested, that’s also legal. For example, you might ask your employer to withhold money for your 401(k) retirement account, for your share of health insurance or life insurance premiums, or for union dues. Your employer may withhold these amounts and pay them to the appropriate account or organization, even if your paycheck falls below the minimum wage as a result. Some states, including California, still require the employer to get your written authorization before making these types of deductions, however.
Questions for Your Attorney
- Does my employer have to reimburse me for business expenses, like gas for work-related travel?
- What can I do if a wage garnishment is leaving me with less take-home pay than I need to support myself?
- Can my employer withhold money to pay for meals it provides in the company cafeteria, even if I don’t eat them?