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Summary of differences between federal and state regulations
Federal regulations restrict the types of deductions that can be made from an employee’s wages or salary. Deductions can be made in certain cases, but the legality often depends on the nature and purpose of the deductions, as well as the status of the employee as exempt or non-exempt.
Under Delaware law, employers are not permitted to deduct or withhold wages for:
- Cash or inventory shortages
- Cash advances or charges for goods and services (unless there is a signed agreement specifying the amount owed and the repayment schedule).
- Damaged property
- Failure to return employer’s property
Nothing in the regulations prevents an employee from voluntarily reimbursing an employer.
Acceptance by an employee of a disputed amount of wages will not be considered evidence that the employee has agreed to the deductions in question.
Cash and/or inventory shortages. These may not be deducted from an employee’s pay in any case. Any written agreement permitting an employer to make such deductions is in violation of §1107.3 of the Wage Payment and Collection Act. These regulations also will apply to shortages incurred as a result of failure to follow proper credit card, check cashing or accounts receivable procedures.
Cash advance or charges for goods or services. If these are to be repaid through payroll deductions, both the employer and the employee must sign a written agreement specifying the amount of the advance or the value of the goods or services, the repayment schedule and the method of repayment. No such agreement shall provide for a repayment schedule of more than 15% of an employee’s gross wages per pay period. If, upon termination, an employee owes an amount greater than 15% of gross wages, that amount may be withheld from the employee’s final compensation, but only if such an arrangement was included in the original agreement.
Damage to property. A financial loss due to damage to property or to that of a customer or client may not be deducted from an employee’s pay in any case. Any written agreement permitting an employer to make such deductions is in violation of §1107.3 of the Wage Payment and Collection Act.
Failure to return employer’s property. In no case shall an employer withhold all or part of the final compensation due an employee while the employer awaits return of property in the possession of the employee. Any written agreement which permits such withholding is in violation of §1107.3 of the Wage Payment and Collection Act.
An employer may request that a deposit be paid on a particular piece of property but such a deposit may not be deducted from the employee’s wages without the employee’s written consent. If the deposit is to be paid out of the employee’s wages, the full deduction must be made by the first regular payday following the issuance of the property to the employee.
A deposit must be returned to the employee along with any financial compensation, provided the employee has returned the property on which the deposit was paid.
If property is returned after all other final compensation has been paid, the deposit on the property must be given to the employee immediately upon return of the property, if possible but in no case later than the next regular payday.
State
Contact
Delaware Division of Industrial Affairs
Regulations
Rules Regulating Deductions from Wages for Wage Payment and Collection – Regulation WP 101
https://dia.delawareworks.com/labor-law/wage-payment.php#deductions
Federal
Contact
Regulations
For non-exempt employees:
29 CFR Part 531, Wage Payments under The Fair Labor Standards Act of 1938
For exempt employees:
29 CFR Part 541, Subpart G, Salary Requirements