What Is My Employer Allowed to Deduct from My Pay?

As an employee, you know how important each cent is in your paycheck. That’s why most people, including you, would be skeptical if strange deductions you don’t recognize started appearing on your pay stubs.

Employers in California are allowed to make certain deductions from their employees’ gross earnings, but these must be authorized by law or with the expressed consent of the employee (such as contributions to health insurance plan premiums). In other words, employers are not as liberated to deduct from earned wages as some may think.

Deductions Authorized by Law

Paycheck deductions permitted by law – and without the expressed consent of the employee – are limited to taxes, wage garnishments, and meals and lodging.

Wage deductions for taxes are more commonly referred to as tax withholdings, and nearly everyone earning a paycheck is subject to them. By law, your employer is permitted to deduct wages for taxes for state and federal income, social security, and state disability insurance obligations. You can control how much is deducted by claiming allowances on a W4. Taxes will have to be paid one way or another, however, so you may end up owing taxes on April 15 if you claim too many allowances.

Wage garnishments are deductions your employer is required to make when your creditors are collecting upon your debt. If you owe debt to a private creditor, they must get a court order before wage garnishment can begin. If you owe back taxes to the IRS or state tax collection agency, no such order is needed to begin wage garnishment. In either situation, your employer will directly send up to 25 percent of your total earnings to the levying officer for as long as it takes to settle your debt.

If your employer provides meals and/or lodging, these costs can be deducted from your paycheck. Employers must keep a record of all costs, which means there must be an accounting for how many meals you purchased or how long you stayed in employer-provided lodging. If no such recordkeeping exists, no deductions are permitted by law. Additionally, your employer must gain your specific and prior voluntary consent before it can begin deducting these costs from your pay.

Examples of Illegal Deductions

Some examples of illegal deductions that employers commonly attempt to make include the following:

  • Debts owed to the employer: If you are in debt to your employer, your wages cannot be deducted as a means of collecting that debt. Your employer must pay you your full earned wages first and go through the proper legal channels to collect a debt.
  • Cash shortages or loss of equipment: Plenty of people are familiar with the saying “That’ll come out of your paycheck!” The reality is that employees who operate cash registers or use employer-provided tools are not on the hook for cash shortages or lost equipment, even if it was the result of an employee’s honest mistake. If your employer suspects you of stealing, dishonesty, or gross negligence, they are required to provide clear evidence before such business expenses can be passed on to the employee.
  • Uniforms or I.D. badges: If your job requires you to wear a specific type of clothing or have an identification badge, your employer must afford these costs and they cannot be deducted from your paycheck.
  • Business expenses: When you spend any of your own money for a business-related reason or while on a business trip, your employer is required to reimburse you for all of your expenses. This can include gas, airfare, lodging, tolls, parking, rental vehicles, laundry, meals, and more.
  • Workers’ Compensation Costs: Employers are prohibited by law from taking any deductions from an employee’s earnings to cover any cost of workers’ compensation, either directly or indirectly.

Do You Need Legal Help?

If you’ve noticed unusual or unexplained deductions from your paychecks and your employer hasn’t provided a satisfactory explanation or correction, seek legal assistance. You may be a victim of illegal wage deductions and entitled to seek fair and just compensation for what you deserve.

Schedule a consultation with our attorney at Limonjyan Law Group to learn more about what our attorney can do for you. Get in touch with us by calling (213) 277-7444 or by contacting us online.