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
Updated to reflect the lifting of an injunction that had blocked implementation of the St. Louis minimum wage ordinance, effective May 5, 2017.
Updated to reflect information on a court ruling that the tip credit does not apply to restaurant delivery drivers.
Updated to reflect the forthcoming Flagstaff minimum wage ordinance.
Updated to reflect state preemption of local minimum wage laws, effective March 30, 2017.
Updated to reflect an announcement regarding the state minimum wage rate.
The Walt Disney Company has agreed to pay $3.8 million in back wages to more than 16,000 employees after the US Department of Labor (DOL) found it had violated the minimum wage, overtime and recordkeeping provisions of the Fair Labor Standards Act (FLSA).
Enhanced to improve comprehensiveness with the addition of the minimum wage ordinance in Bangor.
Updated to include the Uniform Wage Garnishment Act.
Updated to reflect an increase in South Dakota's minimum wage, effective January 1, 2017.
HR guidance on complying with the FLSA requirements for deductions below the minimum wage.