HR Support on Deductions Below the Minimum Wage

Editor's Note: A few narrow exceptions to the minimum wage requirements of the Fair Labor Standards Act (FLSA).

Michael CardmanOverview: Employers may deduct employees’ cash wages below the rate required by minimum wage laws only under certain limited circumstances.

The most common is the tip credit, which allows employers to deduct up to $5.12 per hour from the cash wage paid directly to tipped employees as a credit for the tips they receive.

Employers also may deduct a certain amount of their employees’ cash wages for:

  • The cost of housing, meals and other items they provide, as long as the employee agrees to the deduction and other requirements are fulfilled;
  • Wage garnishments;
  • Other court-ordered deductions; and
  • Voluntary assignments to third parties, such as child support.

These deductions are all narrow in scope, and employers should review the requirements carefully before applying them.

Author: Michael Cardman, Legal Editor

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HR guidance on complying with the FLSA requirements for deductions below the minimum wage.