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Terms and Definitions

What is negative net pay?

Updated: May 20, 2024

Negative net pay definition and meaning

Negative net pay occurs when an employee owes more in deductions than earned wages. It happens when an employee’s total gross earnings for a period is less than the total of all taxes and voluntary or involuntary deductions.

 

More about negative net pay

When an employee has negative net pay, their employer must reduce their deductions before processing payroll, so that the total of taxes and deductions are equal to the total gross pay for that period. There is no requirement for the net pay to be greater than zero.

Using negative net pay in a sentence

“Due to multiple garnishments on their paycheck, I have an employee who occasionally goes into negative net pay, so we have to keep an eye on it in case we need to adjust any deductions.”

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