When Can an Employer Deduct From an Employee’s Wages in Texas?


Hey everyone, Paul Simon with the law firm of Simon Paschal. Welcome to Simon Paschal Says. Today, we’re going to add answer the question of when can an employer deduct from an employee’s wages? Deducting from wages generally takes into account two different laws here in the state of Texas. One is the Texas Payday Law Act and the other is the Fair Labor Standards Act, the FLSA. What the FLSA governs is minimum wage and overtime. So there’s issues when you deduct from an employee’s wages and take that employee under minimum wage or don’t pay them their overtime because of the deduction. And so that will impact the FLSA from the Texas Payday Law Act. The question there is whether or not you are as an employer, required to have a written wage deduction authorization.

So let’s take those kind of together and walk through this. When can you generally deduct from an employee’s wages without a written authorization? There are very limited circumstances where you can do that and generally they are paying for or deducting for insurance premiums, court ordered garnishments and then payroll taxes. Those are kind of your only three things that you can deduct from an employee’s wages without written authorization.

Then, what can you deduct from… When can you deduct from an employee’s wages when you have a written authorization? Now that written authorization has to specifically say, “For this sort of item, you can deduct from my wages.” So if I order a company shirt, you can deduct that out of my wages. Or if I get meals from the company, you can deduct that from my wages. Or if I take vacation, you can deduct that from my wages. Now one of the issues that comes up oftentimes is employee theft or when an employee damages an employer’s property, can you deduct that from an employee’s wages? And the question’s going to be one, is that included in a written authorization and then two, does it take it below minimum wage? And so in that sense, you need to make sure you have the written authorization, and then also when you deduct it, make sure that it doesn’t take the wages of the employee below minimum wage, or if the employee worked overtime, make sure they’re still getting pay at that time and a half.

So the tip that we generally have our clients do is, make sure you get that written authorization prior to when you actually need to deduct from your employee’s wages. Oftentimes, when an employee does something that causes you to have to deduct from their wages, they’re not in the mindset to want to give that to you, so you need to get it beforehand. So we generally advise our clients that, that should be something that you have your employees sign in the new hire paperwork. They sign the handbook, they should sign the wage authorization, just to get that out of the way. It’s good for the entire time that they’re an employee with you. So 10 years down the road, if you need to deduct from that employee’s wages, as long as it was authorized in that written authorization, you can go ahead and do it. So that’s our tip of the week. We’ll see you next time.

 

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