Deductions from wages - Maryland

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.

Maryland law requires that work, whether satisfactory or not, must be awarded compensation. Wage deductions are extraordinary, and are prohibited unless:

1. A court has ordered or allowed the employer to make the deduction. Examples include court ordered wage garnishments and orders to pay child support.
2. The Maryland Division of Labor and Industry has allowed the deduction to offset or “pay for” something of value the employee has received. Examples include long distance telephone calls on the employer’s business phone, personal loans, wage advances, etc.
3. Allowed by some law or regulation of the government. Examples include state and federal taxes.
4. The employee has given express written authorization to the employer to make the deduction. This should take the form of a separate and distinct statement, signed by the employee, concerning only the deduction and nothing more. Even with a proper authorization, employers must still pay at least the federal minimum wage in the case of a deduction made to offset a loss to the employer due to the admitted or court determined fault or negligence of an employee (for example, careless damage to the employer’s truck). If the deduction is made to offset something the employee received or retained from the employer which had monetary value (for example, personal loan, use of long-distance telephone line, materials, etc.), the deduction may, in that case, reduce the employee’s wages below the minimum wage. An authorized deduction may be invalid if it violates or is inconsistent with other federal or state laws or regulations.

An employer may include as part of an employee’s wages the costs of board, lodging, or other advantage afforded to the employee unless prohibited by a collective bargaining agreement.

An employer may deduct union dues from an employee’s wages.

An employer can not deduct from an employee’s wages any part of the premium for workers’ compensation insurance an employer is obligated to pay.

An employer may not require a deduction from an employee’s wages to cover the employer’s costs of unemployment compensation.

State

Contact

Maryland Department of Labor, Licensing and Regulation Division of Labor and Industry

Regulations

Maryland Statute § 3-503 (general)

Maryland Statute § 3-418 (board and lodging)

Maryland Statute § 4-401 (union dues)

Maryland Statute § 9-1101 (workers’ comp premiums)

Maryland Statute § 8-1303 (unemployment)

Federal

Contact

Wage and Hour Division

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