Per federal law, the standard rule is that employers may deduct certain costs from their worker’s paychecks, as long as the deductions don’t drop the employee’s earnings below the minimum wage.
Some states have laws that are more protective of workers. For instance, some states forbid employers from passing certain business costs on to employees. And, even in states that authorize these kinds of deductions, employers must follow certain rules.
Some employers charge their workers for the cost of necessary supplies through payroll deductions. These supplies can include uniforms and tools. This conduct, while maybe undesirable, is not necessarily illegal.
Federal labor law allows employers to deduct the cost of supplying uniforms and tools from their employees’ paychecks. Employers are also entitled to deduct the cost of cleaning and maintaining those supplies.
The Fair Labor Standards Act (FLSA) and Occupational Safety & Health Act (OSHA) address whether employers can require workers to pay for tools, uniforms, and safety equipment. Additionally, many state laws cover these pay requirements. Check your state law to ensure compliance.
Some states direct employers to pay for the total cost of necessary uniforms and the cost of maintaining them. You have to pay for the uniforms upfront or reimburse workers the total amount in these states. Without a state requirement, if you require the employee to pay for uniforms, the expense may not decrease their wages below the minimum wage or cut into their overtime pay.
Note: Per the FLSA and state laws, employers are usually required to get an employee’s consent before making a deduction from their pay. The agreement must outline the item(s) for which deductions will be made and how the deduction amount will be determined. It is best to obtain the employee’s authorization in writing and consult legal counsel before making this type of deduction.
Per the FLSA, if the employer pays the cost of laundering, ironing, dry cleaning, or any other special care of uniforms, the employer can deduct these expenses from the non-exempt worker’s pay. Nevertheless, the deductions may not drop their pay below the minimum wage or dip into their overtime pay.
If these costs drop employees’ pay below the minimum wage or impact overtime pay, the employer must reimburse employees for the shortfall. Per the FLSA, there is an exception to this rule for “wash and wear” uniforms that can be washed with other personal garments. In such situations, no reimbursement would be necessary per the FLSA.
Note: Some states require employers to take on the total cost of washing uniforms, except when they require only machine washing and drying, so look at your state law for compliance.
Generally, employers must pay the total costs of personal protective equipment (PPE) necessary under OSH Act regulations. Employers also have to also pay for replacement PPE used to comply with the rules.
Nevertheless, when a worker has lost or purposely damaged PPE, the employer is not demanded to pay for its replacement (even though the FLSA rules about deductions still apply, and state law may also have restrictions). For more information, see this OSHA handout.
Some states direct employers to pay for the total cost of required tools and equipment. In these states, you would have to pay for the tools upfront or reimburse workers. If there isn’t a state requirement to pay for tools and equipment, you must make sure any expenses the employee bears do not reduce their pay below the minimum wage or cut into overtime pay.
Note: Some states make exceptions for specific tools or equipment, such as tools and equipment customarily required by the employee’s trade. Check your state law for more information.
For non-exempt workers, the FLSA permits employers to make deductions from employees’ pay for lost/stolen/unreturned equipment. It doesn’t reduce the employee’s pay below the minimum wage and does not dip into any overtime pay. Yet, some states ban this practice or have additional requirements requiring prior written consent, so check your state law before making a deduction. The FLSA does not permit this deduction from exempt employees’ pay.
The only limitation imposed by federal law involves minimum wage. The deductible amount cannot drop the employees’ wages below the federal minimum wage.
Therefore, if an employee earns the minimum wage, they do not have to pay for supplies.
Some employers charge workers for goods they break or shortages in the cash register drawers. Per federal law, employers can charge the employee for these losses if the employee is still earning at least the minimum wage.
Several states are more protective. Some states direct employers to get the employee’s consent in writing before deducting the cost of broken items or cash register shortages from the worker’s paycheck. Some authorize these deductions only if the worker admits to being liable for the loss or shortage.
Per federal law, there’s an exception to the general rule that paycheck deductions can’t drop an employee’s pay below the minimum wage. Employers may deduct the expenses of providing lodging and meals to workers, even if that causes the worker to take home less than the minimum wage. For example, in fast-food restaurants, many workers work minimum wage jobs—and employers often charge workers the price of one meal every shift.
Employers can deduct meals and lodging only if they are being provided mainly for the employee’s benefit and only if it is customary in the industry to supply those items to workers. And, the employer can only deduct the reasonable expense of providing the items, not what it would charge the public.
Employer loans are another exception to the standard rule that deductions can’t reduce an employee’s wages less than minimum wage. If a worker owes your company money—for a salary advance, for instance—the company could withhold money from the employee’s paycheck to pay itself back, even if its earnings would drop below minimum wage.
Some states forbid paycheck deductions for debts to the employer or limit the situations under which these deductions may be made. For instance, state law might direct employers to secure the employee’s agreement on a signed consent form to withhold this money.
In addition to the federal law, it is a good idea to check your state’s labor laws. Many states offer more protections for employees than federal law does. For example, New Jersey prohibits employers from charging employees for uniforms with a company logo, while California and Massachusetts ban charging employees for the cost of tools.
An experienced employment law attorney should be able to tell you if your employer is violating any laws. Use LegalMatch to find a lawyer who can advise you on payroll deductions today.
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