Wage Deductions Under Massachusetts Law
Navigating Wage Deductions in Massachusetts: What Employers Need to KnowThe Massachusetts Wage Act governs the timely payment of wages, but it's essential to grasp the limitations regarding paycheck deductions. Many employers aren't aware that only a few deductions are allowable under state law, and improper deductions can lead to Wage Act violations and potential triple damages.
The Allowable DeductionsThe Wage Act permits "valid set-offs" for employees paid a salary or hourly wage. In the case of commission payments, deductions must adhere to what is "allowable or authorized." Deductions that serve the employer's interests rather than the employee's are prohibited. Some allowable deductions include union dues, income taxes, and health insurance premiums—deductions that align with statutory authorization and benefit the employee.
Taxes and BenefitsEmployers must withhold federal and state income taxes and social security taxes from employee wages, remitting these amounts to the appropriate taxing authorities. Employees can manage tax withholdings by adjusting their Form W-4 exemptions. Employers can also deduct pre-tax payments for employee benefits such as health, life, and dental insurance.
Employee Liabilities or ObligationsWhen an employee has financial obligations to the employer, such as damage to company property or loans, the employer can hold them responsible. However, due process must determine the employee's obligation, and clear, agreed-upon policies are essential. Employee loans should follow legal guidelines, especially for larger sums, and employers should proceed with caution.
Garnishment or LiensCourt-ordered garnishments, like child support or civil judgments, may result in wage deductions. However, there are strict limits on the amount that can be garnished, and employers must ensure compliance with the garnishment order and relevant laws.
Training or Signing Bonus ReimbursementAgreements that require employees to repay certain amounts on termination, like relocation expenses, initial training costs, or signing bonuses, are valid if they create an employee obligation. However, employers should avoid unilaterally withholding these funds from a final paycheck and follow established procedures.
The Special Case of Commission Based EmployeesCommissions are considered wages under the Wage Act, but deductions from commissions can be complex. Different commission structures may have varying interpretations of "allowable or authorized deductions." It's advisable for employers to seek legal counsel for clarity before implementing deductions against commissions.
Best Practices for Payroll DeductionsEmployers should exercise caution when making payroll deductions to avoid violating state and federal laws. Written documentation for all deductions, signed authorizations for tax deductions, and careful consideration of commission structures are essential best practices to ensure compliance and protect both employees and employers.
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Emily Smith-Lee is the owner and founder of slnlaw. She is a 1996 graduate of Boston College Law School. She was previously a partner at the Boston office of a large international firm, where she worked for thirteen years before starting the firm that became slnlaw in 2009. She has been recognized as Massachusetts Superlawyer each year since 2013, and in 2018 earned recognition as one of Massachusetts Lawyers Weekly's Lawyers of the Year. She has written a book on employment law: Rules of the Road, What You Need to Know About Employment Laws in Massachusetts, and helped thousands of clients on both the employee and employer side with severance and non compete review and negotiation, wage and hour, discrimination and retaliation disputes, and advice about employment law generally.
Rebecca Rogers: Rebecca is a 2006 graduate of Boston College Law School, and has worked with slnlaw since 2013. She previously worked as an intellectual property litigation attorney for Fish & Richardson in Boston, Massachusetts, and clerked for the Massachusetts Supreme Judicial Court. Rebecca has helped clients with wage and hour disputes, employment discrimination and retaliation claims, review and negotiation of severance and non compete agreements, and advice to both employees and employers about navigating complex employment situations.
Jenna Ordway: Jenna is a 2013 graduate of Quinnipiac Law School, and also earned an LLM in Taxation from Boston University in 2015. She has been affiliated with slnlaw since 2011, first as a law clerk and then as an attorney. Jenna has been recognized since 2019 as a "Rising Star" by Massachusetts Superlawyers. Jenna has helped clients with review and negotiation of severance and non compete agreements, wage and hour disputes, employment and discrimination claims, and advice to small business owners about employment law and other business matters.
Elijah Bresley: Eli is a 2014 graduate of Seton Hall Law school, and has worked with slnlaw since 2020. He previously worked for a boutique employment law firm outside of Boston, and then for the Labor and Employment department of a large Boston firm. He also spent a year clerking for the judges of the Superior Court in Hartford, Connecticut. Eli has helped clients on the employee and employer side with all varieties of employment law issues, including employment discrimination, retaliation, and wage and hour issues, litigation in MCAD and state and federal courts, and advising employers about employment policies and practices.
Sharleen Tinnin: Sharleen is a 2010 graduate of Northeastern University School of Law, and has been with slnlaw since 2023. Prior to joining slnlaw, she worked with King, Tilden, McEttrick & Brink, P.C. on complex civil litigation matters. She previously worked for the United States Department of Justice, and received an "Excellence in Justice" award in 2017. Sharleen has helped clients with wage and hour, discrimination and retaliation disputes, review and negotiation of severance agreements, and litigation in MCAD and state and federal courts on employment related issues.
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Our experienced team can guide you through the intricacies of wage deductions, ensuring compliance with Massachusetts labor laws. You can use the button below to schedule a call back from a member of our team, or give us a call at 781-784-2322.
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