I was paid a employee referral bonus of $1,000. It was a separate check and I received $581.00. What method did they use? I work for a company of about 500 people. How is this fair?

A bonus is still considered earned income. Depending on your tax bracket and where you live, a 40% witholding isn't outrageous. Fed IT-25%, State IT (?), maybe City IT, Social Security-7.5%, possibly unemployment insurance..

Social security is 4.2%, while Medicare is 1.45%.

In total, the withholding looks correct.

In addition to what the previous posters mentioned, some companies also deduct for a 401(k) plan contribution from bonus money like this. You should receive a pay stub that shows the accounting which should make it clear how they did the math.

I agree, a 1000 check is normally about that 40 percent taken out. I know that is what they used to get out of mine