Employment Law Tip for Illinois Employers #1: Paycheck Deductions

Employers may deduct the cost of replacement equipment from an employee’s wages, but they must have the employees provide voluntary written consent to do so.  Il. Admin. Code 300.840 states: An employer may require an employee to pay for required uniforms or necessary equipment, but it cannot deduct the cost from the employee’s paycheck without the employee’s voluntary written consent. 

820 ILCS 115/9 provides further guidance regarding these deductions and states that deductions by employers from wages or final compensation are prohibited unless such deductions are (1) required by law; (2) to the benefit of the employee; (3) in response to a valid wage assignment or wage deduction order; (4) made with the express written consent of the employee, given freely at the time the deduction is made.

In addition, Employers should always be mindful of Federal Law and Regulations that effect employment related matters, specifically the Fair Labor Standards Act (“FLSA”).  Regarding the deduction issue, the FLSA provides that these deductions may be made from an employee’s wage as long as the deduction does not reduce the employee’s wages to below the current minimum wage.  Also, that deduction may never cut into overtime compensation required by the Act.

For example, if an employee who earns the Federal Minimum Wage of $7.25 per hour, the employer may not make any deduction from the employee's wages for the cost of the uniform, or any other required item, nor may the employer require the employee to purchase the item on his/her own.  However, if the employee were paid $7.75 per hour and worked 30 hours in the workweek, the maximum amount the employer could legally deduct from the employee's wages would be $15.00 ($.50 X 30 hours).  Please, note that Illinois Minimum Wage is $8.25.

The employer may prorate deductions for the cost of the required item over a period of paydays provided the prorated deductions do not reduce the employee's wages below the required minimum wage or overtime compensation in any workweek.  Employers may not avoid FLSA minimum wage and overtime requirements by having the employee reimburse the employer in cash for the cost of such items in lieu of deducting the cost from the employee's wages.

Therefore, it would be an employer’s best practices to not only include the specific details regarding the necessary or possible deductions for uniforms, equipment, etc.  in the company’s handbook or written policies, but also to ensure compliance with Illinois state law, and ensure that at the time of the deduction, the employee signs again a voluntary written acknowledgement for that necessary deduction.   Keep in mind the Illinois Department of Labor does not recognize blanket authorization for deductions.  Remember to be specific regarding these deductions.

A helpful tip to put this recommendation into action is to request that an employee fills out an “equipment replacement form”.  That form can include the necessary language to ensure compliance with Illinois and Federal Law to protect the Employer from any potential FLSA and Illinois Wage Claims.

For assistance with the preparation of any corporate handbook, equipment replacement forms, or any further employment related matters, please contact Dana Perminas, at dperminas@messerstrickler.com or by calling Dana at 312-334-3474 for more information.