Improper Deductions

The Fair Labor Standards Act (FLSA) and the Texas Payday Law provide certain standards in compensation for workers, including minimum wage and overtime provisions. There are situations in which an employer is allowed to deduct from minimum wage or other compensation, but in many cases, employers in Texas violate them. If you have been subject to improper deductions in your wages, the experienced Austin FLSA lawyers at Wiley Walsh, P.C. may be able to help you.

The Fair Labor Standards Act (FLSA) allows deductions from minimum wage for meals, lodging, and other facilities, as well as tip credits, voluntary wage assignments, vacation pay advances, loan and wage advances, uniforms, uniform cleaning costs, employee-owed payroll taxes, union dues, garnishments ordered by courts, statutorily-required wage attachments, and cash shortages because of misappropriation.

The Texas Payday Law requires all deductions, except for those for payroll taxes, judicially ordered garnishments, and those required by law or statute, to be legal and specifically authorized in writing by an employee. If an employer does not get written authorization, and the deduction does not fall into one of the categories that are exempt, it is improper. Sometimes an employee authorizes a deduction, yet it is improper because it violates minimum wage, overtime laws, or other laws, such as what is allowed to be deducted for child support garnishments or student loan attachments.

Under 29 U.S.C. § 203, an employer may take a tip credit for an employee who customarily and regularly earns at least $30 a month in tips. In that case, an employer may pay the tipped employee $2.13 per hour, taking a $5.12 tip credit. The assumption is that tips will make up the difference between this amount and the minimum wage. Deductions for the tip credit are valid under the Texas Payday Law because they are expressly authorized by a federal law. However, it cannot be used toward paying minimum wage unless you have been told about the provisions of section 203 and other specific information about the rate of pay and amount of tip credit being taken. All tips must be retained by the employee, except in the case of a lawful tip pool among workers who customarily and routinely receive tips. The tip credit cannot be more than the value of the tips that you actually receive, and there may be improper deductions with regard to this category.

An employer may be allowed to deduct for meals, lodging, and facilities given to employees that are considered payment in kind. However, these deductions need to be authorized in writing under the Texas Payday Law. The FLSA also allows for the reasonable cost of these to be deducted as long as the employer does not profit from it. Employers are also allowed to take deductions for things that benefit the employee, but only if the employer does not profit from them. This can include, for example, your contribution to a health plan.

If you ask your employer for a loan or wage advance, the repayment of the loan or advance can take you below the minimum wage. However, the employer is supposed to document the advance or loan, and the deduction is only permitted for the principal of the loan, rather than for interest or administrative fees, which should not cut into your minimum wage or overtime pay. Additionally, you must have authorized the deduction in writing under the Texas Payday Law. Similarly, vacation pay advances need to be authorized in writing and are considered an advance of pay.

The circumstances under which your employer can deduct for uniforms and uniform cleaning costs are restricted and complicated. Only the reasonable cost of uniforms and cleaning costs can be deducted. You can also be required to buy clothes that are consistent with a dress code, even if the deduction or cost takes you below the minimum wage. However, the cost of company clothes that are specially branded cannot take you below the minimum wage.

Deductions for required payroll taxes like FICA and withholding need not be authorized by you to be valid. Similarly, court-ordered garnishments within the legal limit can take you below the minimum wage. For example, court-ordered child support or alimony may be subject to court-ordered garnishment.

The rules related to wage deductions are highly complex. If you are concerned about improper deductions at your job, you should consult a knowledgeable Austin attorney. The wage law attorneys at Wiley Walsh, P.C. represent workers in cities such as Austin, Georgetown, Round Rock, Cedar Park, Pflugerville, Leander, Del Valle, Kyle, San Marcos, San Antonio, New Braunfels, and Fredericksburg. Call us at (512) 271-5527 or use our online form to set up an appointment.