The wage & hour attorneys at Martin & Martin routinely receive telephone calls from employees asking whether it is legal for their employer to deduct work items from their paycheck. There are certain items that an employer may deduct from an employee’s paycheck. However, not all deductions are legal. The first question an employer must ask prior to making payroll deductions is whether the employee is paid minimum wage. If the employer compensates the employee at minimum wage, the employer may not make payroll deductions for things like uniforms, equipment, cash shortages, etc. because those deductions would reduce the employee’s pay to below minimum wage which violates the federal Fair Labor Standards Act (FLSA).
For employees whose wages are above minimum wage, an employer may make deductions for the cost of uniforms, equipment, cash shortages, and breakage. However, again, the employer must ensure that after the deduction, the employee’s hourly rate is at least minimum wage or time and a half for overtime hours. For example, if an employee is paid $10 per hour and worked 10 hours during the relevant week, their wages equal $100. If the employer deducted $30 for a cash register shortage and breakage, the employee’s final pay of $70 is less than minimum wage for the 10 hours and therefore, the employer would be in violation of the FLSA.
Related to payroll deductions, this month, the Department of Labor issued a press release about a large recovery of back wages for employees at several Wing Stop locations. The operator of these Wing Stop restaurants charged the employees for their uniforms, safety training, bacground checks and cash register shortages. The DOL recovered over $100,000 for the employees after an investigation into the pay practices. The DOL found:
Minimum wage violations: paycheck deductions for uniforms and cash register shortages which caused some employees’ houry rate to fall below the minimum wage of $7.25.
Overtime wage violations: paycheck deductions for safety training and background check caused employees’ overtime rates to fall below time and a half.
The DOL also found recordkeeping violations. The DOL states that “restaurant industry employees work hard, often for low wages, and many depend on every dollar earned to make ends meet.”
If you have a question about whether deductions to your paycheck are legal, the attorneys at Martin & Martin would be happy to speak with you for a free consultation.