What Is the Maximum Amount We Can Deduct for Unreturned Equipment?

Under federal law, employers can deduct the full cost of unreturned company equipment from an employee’s paycheck only if the deduction doesn’t bring their pay below the federal minimum wage or affect overtime compensation. This rule applies primarily to non-exempt employees covered under the Fair Labor Standards Act (FLSA).

For exempt employees, improper deductions may risk their exempt status entirely, so caution is advised.

Additionally, many states have their own wage laws that further restrict or prohibit deductions entirely, unless there’s written authorization from the employee. To stay compliant, always review state regulations and consult legal counsel before making any deductions from final pay.

The insights provided herein are for informational purposes only and should not be construed as legal advice. The information is not exhaustive, and laws vary significantly by jurisdiction and specific circumstances. You should consult with a licensed attorney in your relevant jurisdiction for advice regarding your individual situation.