You have legal recourse for unlawful deductions
As anyone who has ever looked at a pay stub knows, there's always a difference between your gross pay and your actual take-home pay. However, laws and regulations govern what your employer is and is not allowed to deduct from each paycheck. It's important to know what those laws are so that you can spot any unlawful deductions — and take legal action if your rights are violated.
Breaking down the types of paycheck deductions
Certain payroll deductions are required by law. Your employer has to take income taxes, Social Security taxes, and similar taxes out of your paycheck. Levies ordered by the IRS (for instance, if you owe back taxes) can also be taken out of your paycheck, even without your permission.
The second category is voluntary deductions; that is, payment for benefits that the employee agrees to have deducted from their paycheck. Some examples of voluntary deductions include:
- Insurance premiums, such as health, dental, vision, disability, and life insurance
- Retirement contributions such as a 401(k)
- Payments into a flexible health savings account (HSA)
- Stock purchase plans
- Union dues
- Charitable contributions
Voluntary deductions are only lawful if the employee has authorized them in writing. If your employer didn't ask for your permission and get your authorization in writing before deducting these items from your paycheck, then the deduction is illegal.
Another category is deductions that are for the benefit or convenience of the employer. In addition to the requirement that they get your consent in writing, in Ohio, employers are only allowed to deduct these types of costs if they do not take you below minimum wage. Some such deductions include:
- Uniforms that can only be worn on the job
- Tools and supplies needed for your job
- Drug tests, physicals, or other tests required by the employer
- Damage to the employer's property
- Losses due to customers not paying their bills
- Losses caused by the employee's negligence
One implication of this law is that if you make minimum wage, your employer can't deduct anything for their benefit or convenience from your paycheck, even if it was a loss because of your own negligence. For example, if a cashier makes minimum wage, the employer can't take losses from a short cash register out of the cashier's paycheck (although they are free to discipline the employee in other ways).
Finally, an employer can only make a deduction for the employee's benefit if the employee is actually taking advantage of the benefit. For example, your employer can only deduct the cost of an employer-provided lunch from your paycheck if you are actually eating the provided lunch. Furthermore, the deduction must reflect the true cost of the benefit, without any profit, commission, or dividend for the employer (that is, they can't make a profit on your lunch).
If your employer has made unlawful deductions, you have legal recourse
Depending on the circumstances, you may have a claim under the federal Fair Labor Standards Act, the Ohio Fair Labor Standards Act, or both. An experienced wage and hour attorney can review your case, identify whether your employer violated the law, and advise you of your legal options. There's no obligation to hire us, just answers about your rights as an employee. If you suspect your employer made unlawful deductions from your paycheck, give us a call or contact us online today.