There are a variety of reasons why employers may need to or are required to deduct money from an employee’s pay. These reasons range from legally required deductions for taxes to deductions for the employee’s benefit (with the employee’s written authorization). The following are examples of permissible or required pay deductions by employers.
Employers must make deductions for federal, state, and local income taxes and social security taxes and submit the amounts withheld to the appropriate governmental agencies.
Employers must deduct payments required to be made to third parties under a court order, such as child support or garnishment orders. Federal law limits the amount of an employee's earnings that are subject to garnishment and state laws may provide further protection for the employee.
Employees may authorize deductions for various reasons, including purchasing savings bonds or making charitable donations. It is generally advisable for an employer to require written authorization for such discretionary deductions. Further, employers should consult the applicable individual state law for rules on pay deductions as some states have very specific requirements on what may be deducted from an employee's pay even for their benefit or with their...
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