Legal Deductions From a Salary
- All employees in the United States, including salaried workers, must pay employment taxes, unless an exemption applies. An employer must withhold the respective tax from the employee's salary before actually paying the employee. The federal government requires employers to withhold Social Security tax, Medicare tax and federal income tax. Most states mandate state income tax withholding. In some cases, local income tax withholding state disability insurance withholding applies.
A wage garnishment or child support withholding order is also a mandatory deduction. An employer must make the withholding, provided the order is valid. Only the court or a legal institution, such as the Internal Revenue Service, can issue a wage garnishment. An employer does not need written authorization from the employee to make mandatory deductions from her salary. - Certain deductions from salary are legal if the employee consents to it in writing. An employer should check with its state labor department to know which deductions are considered legal under state law. For example, the state generally considers deductions to cover retirement contributions and insurance contributions lawful, provided the employee agrees to it in writing. The state might have specific deductions that are considered illegal. For example, in California, deductions for uniform, gratuities and business expenses are unlawful.
- The Fair Labor Standards Act, which set the standards under which an employee is exempt from the act's overtime provisions, also includes the conditions under which a salaried exempt employee's pay can be deducted. Most salaried employees are exempt, which means they meet the act's salary level and job duties requirements for exempt status, and do not receive overtime.
Generally, these employees receive full salary regardless of days or hours worked. However, besides mandatory deductions and deductions via written consent, an exempt employee's salary can be deducted if he takes more benefit days than he has, to offset amounts received for jury or witness duty, for unpaid disciplinary suspension or for unpaid leave taken under the Family Medical Leave Act. A deduction can also occur for penalties charged because he violated a major safety rule, and during the first and last week of employment, if he did not work the entire week. - An employer can require a salaried employee to work a scheduled amount of hours, such as 40 or 45 hours per week. Salary can be reduced if the employee's hours permanently change, such as from 40 to 35. An employer that makes an improper deduction from a salary should reimburse the employee promptly to avoid losing the exemption and paying the employee for overtime during the time she was exempt.
