Wage Deduction Law

Many states have laws that regulate the types of deductions employers can take from wages and specify how those deductions may be taken. The Minnesota Payment of Wages Act prohibits deductions by employers from the wages of employees without prior written authorization. Additionally, the Fair Labor Standards Act prohibits wage deductions by employers if such deductions drop an employee’s wages below minimum wage. When an employer has made unlawful deductions from employees’ paychecks, those employees may be entitled to both wage deduction damages and liquidated damages. Additionally, employees may be entitled to attorney fees and costs. In many states it is illegal for businesses to take deductions from their employees’ wages. An employer can often only withhold amounts from your wages when:

  • required or authorized to do so by state or federal law
  • a deduction is given in writing by the employee to cover insurance premiums, benefit plan contributions or other deductions
  • a deduction to cover health, welfare, or pension contributions is expressly authorized by a wage or collective bargaining agreement.

Common unlawful payroll deductions include forced payments to other employees to subsidize their compensation, uniform deductions, and deductions for medical or physical examinations.

Further, in Minnesota, no employer may require employees to share their gratuities or to contribute tips to a fund or pool. Service employees, including wait staff, bartenders and other staff are often at the whims of their employers when it comes to tipping policies.  Nationwide, many service positions involve sharing or pooling tips other members of the staff. While some of these policies are legal in other states, Minnesota has a very strict standard and employers can be held liable if their tip policies violate federal or state wage and hours laws. Minnesota courts have stated that pooling or sharing gratuities, “may not be a condition of employment.” Workers who feel coerced or pressured to participate in tip sharing can take legal action to protect their rights and earnings. Any employee who refuses to share tips and is harassed or coerced into participation should consult with an experienced wage and hour law attorney. Such policies could result in liability for employers and damages for employees.