Every worker who receives a paycheck is aware that a variety of things must be subtracted from that money, including mandatory deductions like federal and state taxes and social security, as well as elective deductions like insurance premiums, pension contributions, and IRA plans.

If an employee makes a mistake that results in monetary loss for the business, the employer may deduct the amount from the employee’s paycheck. When deciding whether or not to take funds from an employee’s paycheck, an employer will look at the following factors:

  • Location of the business. The federal regulation specifies that an employee’s salary can be docked for mistakes that cost the company money, but not to the extent where the employee’s wages fall below the federal minimum wage, however these standards differ from state to state.
  • Determine whether or whether the worker is exempt from overtime pay.
  • For the infraction, the company may deduct money from the employee’s paycheck or place them on unpaid suspension.

It is against the law in the state of New Jersey to dock an employee’s wages. Don’t wait to get in touch with a skilled employment lawyer if your New Jersey employer has docked your wages. To learn more, click here.

Can You Tell Me About the Laws in the United States That Prevent Pay Deductions?

It is illegal for an employer to reduce your compensation or apply penalties due to factors like poor performance, mistakes, damage, or shortages. The federal Fair Labor Standards Act (FLSA) allows employers in some states to withhold wages for errors provided the employee agrees in writing to pay for the damages caused by the error and the employer reasonably concludes that the employee was at fault. You cannot have your pay reduced to below the legal minimum due to deductions.

Employees who are exempt from overtime under the Fair Labor Standards Act (FLSA) are generally protected against wage reductions. However, this would not apply if the exempt worker had committed a major breach of safety policies or workplace conduct policies. If an employee is found to have sexually harassed a coworker, for instance, the company may implement a policy that results in the employee taking unpaid leave while the matter is resolved.

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