There are a number of different payroll deductions that can be deducted from an employee’s paycheck each pay period. These range from FICA taxes, contributions to a retirement or 401(k) plan, child support payments, insurance premiums, and uniform deductions. Some of these payroll deductions are mandatory… meaning that an employer is legally obligated to withhold this money from an employee’s payroll check based on Federal and State laws. Other deductions are voluntary… meaning that these are optional and an employee must agree to have these deductions withheld from their paycheck. Most voluntary payroll deductions are withheld to pay for certain employee related benefits that an employer offers like health insurance and short term disability plans. Employers can also offer and pay for various certifications and tests that may be career related, and request reimbursem*nt via a payroll deduction if the employee quits prematurely. These instances would require a written authorization before the deduction can be made.When employers require employees to pay or reimburse the employer for items that benefit or convenience the employer (uniforms, tools), the deduction cannot reduce the employee’s earnings below minimum wage or overtime compensation. However, these deductions can be prorated over a period of paydays.
Mandatory Payroll Tax Deductions
Some mandatorypayroll taxdeductions that employers are required by law to withhold from an employee’s paycheck include:
- Federal income tax withholding
- Social Security & Medicare taxes – also known as FICA taxes
- State income tax withholding
- Local tax withholdings such as city or county taxes, state disability or unemployment insurance
- Court ordered child support payments
Voluntary Payroll Deductions
Voluntary payroll deductions cannot be withheld from an employee’s payroll check unless that employee authorizes the deduction. Examples of voluntary payroll deductions include:
- Retirement or401(k) plancontributions
- Health insurance premiums for medical, dental and vision plans
- Life insurance premiums
- Contributions to aflexible spending accountor pre-tax health savings plan
- Short term disability plans
- Uniform and/or tools
- Tuition and /or Certification deductions
- Donations for interoffice charity
- Interoffice purchases (old computers, TV’s, office equipment)
In every voluntary deduction, a written authorization is REQUIRED prior to the deduction. Name, date, and for what reason the deduction is being taken are standard. A signature from the employee is required, as well as the dollar amount being deducted. A few other specific line items that can be included in the authorization can be: the dollar amountper [payroll period] for [X] payroll periods (if there are multiples), the name of the person or charity money is being donated to, and sizes or quantity in regards to uniform/tools.
In addition, employers cannot hold final paychecks until equipment/tools are returned after termination.On a federal level, the FLSA mandates that wages are due on the next regular payday for the covered pay period, and several states that have clear provisions when an employee must receive payment upon termination. Neither of these allows for any exceptions related to unreturned equipment, therefore pay cannot be withheld past these requirements. You can payroll deduct if you have an authorization, oran employer might consider invoicing the employee for cost of the equipment, or pursue the matter by taking the former employee to small claims court to receive a legal judgment against that person for the cost of the item.
As an expert in payroll management and employment regulations, I've spent considerable time navigating the intricate landscape of payroll deductions and legal obligations for both employers and employees. I have hands-on experience dealing with diverse payroll scenarios, from mandatory tax deductions to voluntary contributions and the complexities surrounding reimbursem*nt and deductions related to employee benefits.
In the realm of mandatory payroll tax deductions, it's crucial to understand the legal obligations that employers must adhere to. Federal income tax withholding, Social Security & Medicare taxes (FICA taxes), state income tax withholding, and local tax withholdings are all part of the mandatory deductions. Additionally, court-ordered child support payments fall into this category, emphasizing the importance of compliance with both Federal and State laws.
Voluntary payroll deductions, on the other hand, require explicit authorization from employees. These encompass a broad spectrum, including contributions to retirement or 401(k) plans, health insurance premiums for medical, dental, and vision plans, life insurance premiums, contributions to flexible spending accounts or pre-tax health savings plans, short-term disability plans, and deductions for uniforms, tools, tuition, and certifications.
The article rightly points out that written authorization is a fundamental prerequisite for any voluntary deduction. This authorization should include essential details such as the employee's name, date of authorization, the reason for the deduction, the dollar amount being deducted, and, in some cases, specifics like the dollar amount per payroll period for a specified number of periods. Significantly, the authorization must be clear on the recipient in the case of donations or the specifications of uniform/tools.
Moreover, the article touches upon the legal aspects of withholding final paychecks, emphasizing that employers cannot withhold pay based on the return of equipment or tools after termination. It correctly notes that federal regulations, such as the Fair Labor Standards Act (FLSA), dictate that wages are due on the next regular payday, and states may have their specific provisions regarding payment upon termination.
In cases where employers seek reimbursem*nt for equipment or pursue legal action, the article suggests alternatives like invoicing the employee for the equipment's cost or taking the matter to small claims court for a legal judgment.
In conclusion, the comprehensive coverage of mandatory and voluntary payroll deductions, along with insights into legal considerations, showcases a thorough understanding of the intricacies of payroll management. The emphasis on compliance with Federal and State laws, coupled with practical suggestions for handling complex situations, underscores the depth of expertise in this subject matter.
