I often receive calls from employees complaining about illegal deductions from their wages. Under the federal Fair Labor Standards Act (“FLSA“), deductions from paychecks are generally illegal if they bring your actual hourly wage below the minimum wage – that is, $7.25 an hour. For waiters, waitresses, and other tipped employees who make less than $7.25 in cash wages, all employer deductions are illegal. Below is just a brief explanation of the types of deductions which are, and are not, allowed.
Illegal deductions from wages generally include any deduction that your employer takes from your pay, and which is related to the business rather than simply for your personal benefit. Some common deductions include payments for:
- Equipment or tools used at the workplace
- Customer non-payment (walk-aways)
- Damages to the employee’s property
- Required employment licenses
These deductions are unlawful if, for any workweek, they bring the employee’s hourly rate below the minimum wage of $7.25 an hour. Notably, many tipped employees (such as servers and bartenders) are always paid less than $7.25 an hour, and sometimes as little as $2.13 an hour. For those employees, any deduction – no matter how small – is a violation of federal labor law. These deductions may also violate Louisiana state law, because a Louisiana statute specifically forbids assessing deductions or “fines” against employees, with a few exceptions.
However, some payroll deductions are required by law, and are not imposed by your employer. These do not violate federal or state law. Legally mandated deductions may include:
- Payroll tax
- Social Security Tax
- Federal or State Income Tax
- Health Insurance Deductions (if applicable)
Because these deductions are not employer deductions, they do not violate federal law. In fact, a business may get in trouble with the IRS if it does not make these required deductions. Some other types of deductions, which are not related to the business itself, may be legal if they are done for the employee’s convenience. For example, if a restaurant allows its servers to eat meals on site, and deducts the costs of the meal from their paycheck, this deduction is for the employee’s benefit, not the employer’s benefit, so it is considered legal.
If you believe your employer has made illegal deductions from wages, or have any other questions about the deductions from your wages, call New Orleans employment lawyer Charles Stiegler at (504) 267-0777, or by email at this link.