Overview: 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:
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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