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Is your employer making lawful deductions from your paycheck? (part 1)
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At pay day, an employee may look at his or her pay stub and see hours worked, salary or hourly rate, gross earnings, and “deductions.” Unless the deductions have been explained, some employees will have vague ideas about what the deductions are for. There was the story of basketball superstar, Shaquille O’Neal who, while looking at huge deductions on his paycheck, asked, “Who is Mr. FICA?” (Alas, “Mr. FICA” is really the Taxman, officially called the Federal Insurance Contributions Act tax.)

Some even shrug these deductions off and see them as inevitable like death and taxes. Funny or not, it is helpful to know whether the right deductions are made to ensure that the employee gets the correct take home pay.  

A deduction is essentially a subtraction of money from the employee’s paycheck. The employer takes a ‘deduction’ when it withholds, sets off, or requires the employee to return, a portion of the wages promised so that the employee, who has done the work, actually receives less than the promised compensation. In order to protect employees, the law regulates deductions. Therefore, there are certain deductions that employers may or may not make.

The following are permissible deductions from an employee’s paycheck:

1) Deductions authorized by state or federal law – These deductions include state and federal income taxes, social security taxes, and state disability insurance taxes. Wage garnishments are authorized only if there is a prior court judgment. Creditors cannot simply ask the employer to deduct money from an employee’s wages to pay the employee’s debts to the creditor. The creditor must seek an order from the court to do so.   If there is no such order (or judgment), a creditor cannot garnish an employee’s wages.

Once a judgment has been issued, however, the creditor (now called a judgment creditor) may levy what’s called ‘a writ of execution’ and compel the employer to withhold and turn over to the levying officer 25% of the employee’s (now called the judgment debtor) earnings. If the debt was due to an outstanding support order, the levying officer may withhold as much as 50% of the employee’s earnings.

2) Deductions expressly authorized by the employee in writing – Examples of deductions that an employee may authorize in advance include: premiums for life, health or disability insurance, contributions to pension or retirement plans, and other deductions made pursuant to voluntary wage assignments. However, the employee must authorize these deductions in writing.

3) Deductions to cover health and welfare or pension plan contributions expressly authorized by collective bargaining or wage agreement – These deductions may normally be found if an employee is a member of a union and the deduction is made according to the terms of the Collective Bargaining Agreement (CBA).


4.) Deduction for “facilities” furnished in addition to wages – An employer may deduct the reasonable costs of board, lodging or other “facilities” furnished to employees in addition to their wages. In some situations, employees may sleep and eat at the workplace, as may be true if they work in residential care facilities.  Here, the employer may credit the costs of the room and lodging to comply with the requirements of the minimum wage law. The amounts that may be credited are prescribed by regulations and must be in writing and signed by the employee.

“Facilities furnished to employees” might also include a company store. If employees buy items at the company store and “charge” it to their wages, the employer may deduct the cost of the item from the employee’s wages. However, the employer must maintain and preserve records substantiating these costs. Failure to keep cost records may bar such a deduction.

Next week, we will discuss the deductions which cannot be lawfully made on an employee’s paycheck.


[C. Joe Sayas, Jr., Esq. is an experienced trial attorney who has successfully obtained significant results, including several million dollar recoveries for consumers against insurance companies and big business.   He is a member of the Million Dollar-Advocates Forum - a prestigious group of trial lawyers whose membership is limited to those who have demonstrated exceptional skill, experience and excellence in advocacy.  He has been featured in the cover of Los Angeles Daily Journal’s Verdicts and Settlements for his professional accomplishments and recipient of numerous awards from community and media organizations .  His litigation practice concentrates in the following areas: serious personal injuries, wrongful death, insurance claims,  unfair business practices,  wage and hour (overtime) litigation.  He is a graduate of Georgetown University Law Center Washington, D.C. and the University of the Philippines.  You can visit his website at www.joesayaslaw.com  or contact his office by telephone at (818) 291-0088.]  Inquiries to this law office are welcome and at no cost.

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