Which may not be deducted from an employee's paycheck?

Which may not be deducted from an employee's paycheck?

• A. Health insurance premiums
• B. Retirement contributions
• C. Workers' compensation insurance premiums
• D. Union dues

Answer: (C)

The key idea is what kinds of deductions payroll can make from an employee’s pay, which typically include voluntary deductions or statutory withholdings, while certain costs are the employer’s responsibility and aren’t taken from wages. Health insurance premiums can be deducted if the employee authorizes it, often on a pre-tax basis through a cafeteria plan. Retirement contributions are commonly deducted from earnings as part of an employee’s savings plan. Union dues can also be deducted if the employee is a union member and has agreed to the deduction. Workers’ compensation insurance premiums, however, are an employer obligation funded to provide coverage for job-related injuries; these premiums are not deducted from an employee’s paycheck. They’re the employer’s cost to secure coverage, so this item cannot be taken from wages.

The key idea is what kinds of deductions payroll can make from an employee’s pay, which typically include voluntary deductions or statutory withholdings, while certain costs are the employer’s responsibility and aren’t taken from wages. Health insurance premiums can be deducted if the employee authorizes it, often on a pre-tax basis through a cafeteria plan. Retirement contributions are commonly deducted from earnings as part of an employee’s savings plan. Union dues can also be deducted if the employee is a union member and has agreed to the deduction. Workers’ compensation insurance premiums, however, are an employer obligation funded to provide coverage for job-related injuries; these premiums are not deducted from an employee’s paycheck. They’re the employer’s cost to secure coverage, so this item cannot be taken from wages.