The Fair Labor Standards Act ("FLSA") is the federal legislation that applies to all employers in the United States and it allows for deductions from an employee's pay (nonexempt employees, that is) so long as it does not cut into the employee's minimum wage (currently $7.25/hour) or overtime pay. Otherwise, the employer may make any deductions to their benefit. Do note, however, that the FLSA does allow for deductions that do affect an employee's minimum wage or overtime pay for things like state and federal taxes, social security, and child support orders.
Since federal legislation doesn't protect employees much from paycheck deductions, it is then left for the individual states to pass legislation to restrict such. In Wisconsin, employees have been protected from certain deductions since 1931 per Wis. Stat. section 103.455. Subject to three (3) exceptions, Wis. Stat. sec. 103.455 provides:
“No employer may make any deductions from the wages due or earned by any employee, who is not an independent contractor, for defective or faulty workmanship, lost or stolen property or damage to property.” According to the Wisconsin Supreme Court, the law “is aimed at preventing employers from using coercive economic power to shift the burden of a work[-]related loss from the employer to the employee.”The three (3) exceptions are:
1) unless the employee authorizes the employer in writing to make that deduction, or2) unless the employer and a representative designated by the employee determine that the defective or faulty workmanship, loss, theft or damage is due to the employee's negligence, carelessness, or willful and intentional conduct, or3) unless the employee is found guilty or held liable in a court of competent jurisdiction by reason of that negligence, carelessness, or willful and intentional conduct.If an employer in Wisconsin violates Wis. Stat. sec. 103.455, the statute provides a remedy of "twice the amount of the deduction or credit taken in a civil action brought by the employee." Thus, employers ought to tread very lightly when considering docking an employee's pay in Wisconsin.