Federal law splits payroll deductions into three categories: withholdings your employer must take, deductions you have authorized in writing, and everything else. Sorting lawful vs. unlawful payroll deductions comes down to which category a given line on your pay stub belongs in. Taxes, court-ordered garnishments, and benefit contributions you signed up for are lawful. Charges that push your pay below the federal minimum wage, deductions for breakage or cash-register shortages, and any arrangement that funnels wages back to the employer generally are not.
Deductions Your Employer Must Take
Some withholdings come out whether you consent or not because federal law requires them. Your employer withholds 6.2% of your wages for Social Security and 1.45% for Medicare under the Federal Insurance Contributions Act.1Office of the Law Revision Counsel. 26 USC 3101 – Rate of Tax The statute directs employers to collect the employee share by deducting it from wages as they are paid.2Office of the Law Revision Counsel. 26 USC 3102 – Deduction of Tax From Wages The Social Security portion applies only to the first $184,500 of wages in 2026; the Medicare portion has no cap.3Social Security Administration. Contribution and Benefit Base High earners pay an additional 0.9% Medicare surtax on wages above $200,000 for single filers, $250,000 for joint filers, or $125,000 if married filing separately.4Internal Revenue Service. Topic No. 560, Additional Medicare Tax
Federal income tax is the other required withholding. Your employer calculates the amount from the information you provide on Form W-4. If you never submit one, withholding defaults to single filer with no adjustments, which almost always overwithholds.5Internal Revenue Service. Form W-4, Employee’s Withholding Certificate Most states run their own income tax withholding on top of the federal amount.
Court-Ordered Garnishments
Garnishments are involuntary but lawful. Your employer must honor them because a court or agency has ordered the withholding, and federal law caps how much can come out.
For consumer debts like credit cards and medical bills, the Consumer Credit Protection Act limits garnishment to the lesser of 25% of your disposable earnings for the week or the amount by which those earnings exceed $217.50 (30 times the $7.25 federal minimum wage).6Office of the Law Revision Counsel. 15 USC 1673 – Restriction on Garnishment Disposable earnings means pay after mandatory deductions like taxes, not gross pay. If your weekly disposable earnings are $217.50 or less, nothing can be garnished for consumer debts.7eCFR. 29 CFR Part 870 – Restriction on Garnishment
Child support and alimony orders allow more. The cap is 50% of disposable earnings if you support another spouse or child beyond the one covered by the order, and 60% if you do not. Either limit rises by 5 percentage points if you are more than 12 weeks behind, reaching 55% or 65%.6Office of the Law Revision Counsel. 15 USC 1673 – Restriction on Garnishment When multiple orders arrive, child support takes priority. The one exception is an IRS tax levy entered before the child support order was established, which comes first.8Administration for Children and Families. Processing an Income Withholding Order or Notice
Deductions That Require Your Written Consent
Voluntary deductions are lawful when you have authorized them in writing. Common ones include health, dental, and vision premiums; contributions to a 401(k), 403(b), or similar retirement plan; deposits into a health savings account or flexible spending account; and union dues. You can typically change or cancel these during open enrollment or after a qualifying life event.
The paperwork matters if a dispute arises later. Employers must retain payroll records for at least three years, and records specifically related to deductions for at least two years under federal regulations.9eCFR. 29 CFR Part 516 – Records to Be Kept by Employers If a deduction shows up on your pay stub for something you never signed up for, that authorization gap is the first thing to raise.
The Minimum Wage Floor on Business-Expense Deductions
When an employer wants to charge you for tools, uniforms, or equipment required for the job, federal law imposes a hard floor. The deduction cannot push your pay below the federal minimum wage of $7.25 per hour in any workweek.10eCFR. 29 CFR 531.35 – Wage Payments Free and Clear If you already earn minimum wage, any deduction for a required uniform or toolkit is an automatic violation, because the costs of running the business cannot be shifted onto the lowest-paid workers. If you earn more, the employer may only deduct an amount that keeps every hour at or above $7.25.
The same protection covers overtime. A deduction for a required item cannot eat into the time-and-a-half premium owed for hours beyond 40 in a workweek. Employers who repeatedly violate these minimum wage and overtime rules face civil money penalties of more than $2,500 per violation under the most recent federal adjustment, and those figures rise annually with inflation.11U.S. Department of Labor. Civil Money Penalty Inflation Adjustments
Recovering an Overpayment
One narrow exception cuts the other way. If your employer accidentally overpays you through a payroll glitch, duplicate deposit, or miscalculated hours, they can recover the overpayment from a future paycheck even if the deduction temporarily drops your pay below minimum wage. The Department of Labor’s reasoning is that the extra money was never actually owed to you.12U.S. Department of Labor. Wage and Hour Division Opinion Letter FLSA2004-19
The exception is limited to principal. The employer cannot tack on interest or administrative fees if doing so would bring your pay below minimum wage. Timing is flexible, so the recoupment can happen in the next pay period or be spread across several. Many states add further protections, including advance written notice or a cap on how much can come out of a single check.
Deductions That Cross the Line
Some deductions are illegal regardless of how much you earn, and this is where employers get into trouble most often. The recurring pattern is treating routine business losses as costs to pass along to staff.
Charging workers for breakage and shortages—a dropped plate, a register that comes up $20 short—violates federal law whenever the deduction brings pay below minimum wage or reduces overtime compensation.10eCFR. 29 CFR 531.35 – Wage Payments Free and Clear Many states prohibit these deductions outright, even for workers earning well above minimum wage, on the theory that routine losses are a cost of doing business.
Kickbacks are flatly illegal under federal law. The regulation requires wages to be paid “free and clear,” and any arrangement where money flows back to the employer or someone acting on the employer’s behalf strips those wages of their legal status as payment. The method does not matter, whether the money moves through a payroll deduction, a cash handoff, or anything else.
What You Can Recover
Workers subjected to unlawful deductions can recover the money that was taken and an equal amount on top of it as liquidated damages, effectively doubling what the employer owes.13Office of the Law Revision Counsel. 29 USC 216 – Penalties Congress built in that doubling because wage theft is hard for individual workers to fight, and the penalty needs to sting.
How to Report an Unlawful Deduction
File a complaint with the Department of Labor’s Wage and Hour Division. The process is free, confidential, and available regardless of your immigration status.14U.S. Department of Labor. Information You Need to File a Complaint You can call 1-866-487-9243 or start the complaint online.15U.S. Department of Labor. How to File a Complaint
Have your name and contact details ready, along with the company’s name and address, a manager’s name, the type of work you performed, and how and when you were paid. Pay stubs and personal records of hours worked strengthen the case but are not required. Federal law prohibits your employer from firing or retaliating against you for filing a wage complaint.