Deductions from Pay and Unreimbursed Expenses

In Massachusetts the law holds employee wages in extremely high regard and with great protection. However there are some valid, but extraordinarily limited situations when employer’s can make deductions from your wages. Wage deductions or set-offs from wages made by employers are not usually permissible except in a few scenarios. FICA and other tax deductions, retirement plan contributions, union dues, judicial wage attachments are all scenarios that can be deducted from your wages.

Voluntary deductions for retirement plan contributions, union dues, and the like are permissible.

Essentially, your employer may have an obligation to withhold FICA and other taxes from your pay.  FICA is a Federal payroll tax for employees and employers to fund Social Security and Medicare. This tax is taken out of your paychecks automatically. It is calculated in two parts: Social Security and Medicare in relation to your gross compensation. In 2013, the Social Security portion is 6.2%, while the Medicare portion is 1.45%. Your employer matches these numbers. However if you are self-employed you are responsible for both portions totaling 15.3%.  Deducting taxes from your pay is lawful, and your employer is obligated to do so.

In most cases employers CAN NOT deduct expenses from a paycheck (even with a promise to repay the deduction later). These types of deductions are considered wages and are still protected  by the Wage Act. See Camara v. Attorney Gen., 458 Mass. 756 (2011).

Other than retirement accounts, and similar voluntary deductions, and the tax withholding, an employer cannot make deductions from your pay.  Involuntary deductions are equally as rare — in very limited circumstances, by Court Order called Trustee Process (wage garnishment), and employer can deduct sums from your wages.

To avoid these strict rules, employer’s regularly attempt to classify a worker as an independent contractor, and then argue that the benefits of employment and the freedom from deductions are not available.  Unfortunately, that is rarely the case as outlined in a recent post .