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Social Security

What Is Social Security?

Social Security is a federal program that is designed to act as a government-sponsored safety net for the elderly, unemployed, and disadvantaged. Most employees will contribute to social security for their entire working life before being able to collect monthly social security payments after they retire.

The Social Security program was created in 1935 by The Social Security Act. President Franklin D. Roosevelt used this program to combat economic hardships during the Great Depression. The act paid financial benefits to retirees over the age of 65 based on their payroll tax contributions during their working years. The Social Security Act of 1935 also created the Social Security Board, an agency that would later develop into the Social Security Administration. 

Social Security has been an economically controversial institution throughout its history. Many politicians and presidents have tweaked the rules of the government program in order to try and keep the program funded. One of the most significant changes to Social Security came during the presidency of Ronald Reagan, who signed legislation in 1983 that taxed Social Security payments, increased the age of retirement to 67, and provided Social Security benefits to federal workers.

In the modern era, the Social Security Administration estimates that approximately 178 million workers pay Social Security taxes and give out benefits to about 64 million recipients. Most people are enrolled in Social Security at birth by their parents or the hospital, setting them up to enter the workforce from birth. Once an individual is old enough to work, their employer will verify their Social Security number with the Social Security Administration, providing a paper trail of earnings and withholding throughout an individual’s life.

Key Takeaways

  • Social Security is a government-funded federal safety net for retired, disabled, or disadvantaged workers.
  • Most people are enrolled in the Social Security program from birth, contribute to it through FICA taxes during their working years, and then receive Social Security benefits once they retire.
  • Employers have a distinct responsibility in ensuring that the proper FICA taxes are withheld from employees’ paychecks as well as matching their FICA contributions.
  • Suppose your employer has improperly handled your FICA withholdings, or you are being denied the social security benefits that you deserve. In that case, an experienced Employment Law attorney may be able to improve the outcome of your case by utilizing experience and expert knowledge.

Social Security and Employment Law

Social Security is an extremely important and complex section of employment law. In general, Social Security withholdings are mandatory, automatic, and unable to be reduced. 

According to Section 201 of the Social Security Act, Social Security benefits are explicitly protected from “garnishment, levy or other withholdings by the federal government.” However, this protection can be waived in order to pay certain fees such as:

  • Alimony
  • Child support
  • Debts to a federal agency
  • Exempt civil penalties
  • Federal taxes authorized by a Notice of Levy or overdue taxes

In these specific instances, only a certain portion of the individual’s Social Security can be garnished each month.

Social Security withholding amounts are dictated by the Federal Insurance Contribution Act (FICA). This law, enacted in the 1930s, mandates contributions from employers and employees to fund Medicare and Social Security. In general, FICA is deducted from employee paychecks and must be matched by a contribution from the employer.

FICA contributions are not only a way to fund Social Security. Employee contributions are tracked annually and the employee receives up to four Social Security credits each year for their contributions. An employee must have at least 40 credits in order to qualify themself and their family for retirement benefits under the Social Security program.

FICA taxes are collected based on a percentage of an employee’s gross pay. Each paycheck, an employee is required to contribute 7.65% of their earnings in FICA taxes: 6.2% for Social Security contributions and 1.45% for Medicare contributions. If an unmarried employee makes over $200,000 or a married couple makes over $250,000, they will be required to contribute an additional 0.9% to Medicare each paycheck.

Because FICA is based on an employee’s gross pay, employers must ensure that they are in complete compliance with FICA tax law. This includes properly attributing earnings as income, withholding the correct amounts for FICA, and matching the contributions of employees at the proper rate. Improperly performing any of these tasks may place the employer and potentially their employees into noncompliance.

Bottom Line

If your employer has mismanaged your FICA tax withholdings or you are being denied the Social Security benefits that you deserve, you may be able to file a lawsuit to remedy your situation. In order to file and prevail in your lawsuit, you will need the help of an Employment Law attorney. 

An experienced Employment Law attorney will zealously advocate on your behalf in order to give you the best possible outcome for your case. Using their legal expertise, trial tactics, and expert witnesses, your Employment Law attorney will be able to gather and present evidence that demonstrates your claims in the most compelling light possible to improve your case's outcome.

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