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Lane
Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 10483
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Can social security and Medicare deductions be counted as

Customer Question

can social security and Medicare deductions be counted as part of the minimum wage
Submitted: 1 year ago.
Category: Finance
Expert:  Lane replied 1 year ago.

Hi,

...

Yes, said differently, FICA (employee owned payroll deductions) which is 1/2 of the total social security and medicare tax (the other half is paid by the employer) can reduce pay below minimum wage.

...

Here's your legal citation for that: 29 C.F.R. 531.38

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"Taxes which are assessed against the employee and which are collected by the employer and forwarded to the appropriate governmental agency may be included as “wages” although they do not technically constitute “board, lodging, or other facilities” within the meaning of section 3(m). This principle is applicable to the employee's share of social security and State unemployment insurance taxes, as well as other Federal, State, or local taxes, levies, and assessments. No deduction may be made for any tax or share of a tax which the law requires to be borne by the employer." (29 C.F.R. 531.38)

Expert:  Lane replied 1 year ago.

Here's a good overview of the allowed deductions from minimum wage under the Fair Labor Standards Act: (note that many of these are restricted in some way, such as the employee agreeing) - but in the case of FICA this is not required - the standard practice is to deduct FICA, on all wages up to the social security wage base

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Under the Fair Labor Standards Act, allowable deductions from minimum wage include:

Meals, Lodging, and Other Facilities
Tip Credits
Voluntary Wage Assignments
Loans and Wage Advances
Vacation Pay Advances
Uniforms and Uniform Cleaning Costs
Employee-Owed Payroll Taxes <-
Union Dues
Court-Ordered Garnishments or Statutorily-Required Wage Attachments
Cash Shortages Due to Misappropriation