Labor and Employment

Wage Payment Requirements under the FLSA

As a general rule, your employer must pay your wages by cash or by a check that is payable on demand. While the Federal Labor Standards Act (FLSA) requires that your wages must not be less than minimum wages or overtime payments, the employer is permitted in some instances to include the cost of board, lodging and other facilities that it furnishes as part of your wages.

How You Are Paid

The FLSA requires that your employer pay your wages in cash or by check. The following methods are not permitted:

  • Company script or vouchers
  • Tokens, coupons or discounts
  • Credit cards

Typical time periods for the payment of wages include daily, weekly, bi-weekly (every two weeks), semi-monthly (twice a month) or monthly. The late payment of wages is a violation of the FLSA, and if the delay is willful, the employer may be liable under the terms of the FLSA for damages and prejudgment interest.

What Is Included in Wages?

While the FLSA requires that your wages must not be less than minimum wages or overtime payments, the employer is permitted in some instances to include the cost of board, lodging and other facilities that it furnishes as part of your wages.

In other words, your employer is allowed to subtract the following items from your paycheck as a credit, meaning as part of your wages, even if you are paid at the minimum wage rate:

  • Board, lodging or facilities furnished by the employer for your benefit
  • Meals furnished to you on a volunteer basis
  • Tuition furnished by a college to a student
  • General merchandise furnished at company stores and commissaries
  • Fuel, electricity, water and gas furnished by the employer for your personal use

Generally, if any of the above items are furnished for the benefit or convenience of the employer, they may not be credited against your wages.

Tipped Employees

The FLSA permits employers to pay a reduced cash wage to employees who customarily receive tips from customers. However, the employer must still pay the regular minimum wage to tipped employees if the amount of tips and the cash wage do not equal the minimum wage. Tips are considered to be the property of the employee, not the employer.

Usually, tipped employees include:

  • Waiters, waitresses or servers
  • Busboys
  • Bellhops
  • Counter people who serve customers
  • Service bartenders

If tipped employees perform duties, such as cleaning and food preparation, that are not incidental to their tipped duties, they must be paid the full minimum wage for those duties. If tips are turned over to the employer, they are no long considered to be tips and the full minimum wage must be paid.

Tipped employees may split their tips among themselves, called tip pooling. However, tipped employees cannot be forced to contribute an unreasonable percentage (usually no more than 15%) of their tips to the pool. Further, if tip pools are shared with nontipped employees, such as busboys, then the tips are not considered to be tips.

Deductions from Wages

Your employer is permitted to make certain withholdings from your wages. Usually, deductions made for the employer's benefit must not bring your regular pay rate to an amount that is below the minimum wage rate.

Examples of permitted deductions include:

  • Taxes assessed against the employee (income tax, Social Security, Medicaid)
  • Voluntary wage assignments, loans or payroll advances
  • Uniform allowances (unless it reduces your pay rate to below the minimum hourly wage rate)
  • Employee contributions to insurance and retirement plans
  • Union dues under a valid check off clause in a collective bargaining agreement

Examples of prohibited deductions include:

  • Kickbacks
  • Cash shortages (unless the loss results from employee theft or misappropriation)
  • Tools or equipment if it reduces the employee's wage rate below the minimum wage rate
  • Workers' compensation insurance
  • Recruitment fees

An employment law attorney can best help answer your questions regarding your wage payments, as the FLSA and related state laws, which vary from state to state, can be complex.

Questions for Your Attorney

  • What can I do if my employer is not consistent and on-time in paying my wages?
  • What deductions from my wages can my employer make?
  • Can my employer demand that I use direct deposit for my paycheck?
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