Employers are generally permitted to deduct certain amounts from employee paychecks. These deductions typically fall into two categories: mandatory and voluntary. Mandatory deductions include taxes (federal, state, and local income tax, Social Security, and Medicare) and court-ordered garnishments (e.g., child support). Voluntary deductions, authorized by the employee, can encompass contributions to retirement plans, health insurance premiums, union dues, and charitable giving.
Understanding permissible paycheck deductions is crucial for both employers and employees. For employers, accurate and lawful deductions ensure compliance with legal obligations and maintain positive employee relations. For employees, this knowledge empowers them to monitor their earnings, understand their take-home pay, and verify the accuracy of deductions. Historically, the evolution of payroll deductions reflects broader societal changes, from the introduction of income tax in the early 20th century to the rise of employee benefits programs. This evolution underscores the increasing complexity of the employer-employee financial relationship.
