Revised Wage Deduction Rules for New York Employers: 5 Takeaways

It was a good week for employers in the state of New York, write Carolyn Richmond and Brynn Hollows (law firm Fox Rothschild):

“With one signature on September 7, 2012, Gov. Andrew Cuomo has made the business community very happy by amending New York State labor law § 193 to expand [the] scope of permissible deductions from an employee’s wages.”

The revised law is intended to provide businesses – and their employees – with greater flexibility for making a number of voluntary paycheck deductions. Law firm Epstein Becker & Green:

“Currently, the Labor Law expressly prohibits deductions from wages, with limited exceptions. Over the past few years, the New York State Department of Labor has issued several opinion letters severely limiting the types of permissible deductions—essentially forbidding any deductions not specifically set forth in pre-amendment Section 193.

The amended Section 193, on the other hand, includes several deductions that are now permitted and provides employers with the ability to recoup inadvertent mathematical or clerical wage overpayments. The amendment also permits employers to create repayment schedules, via wage deduction, for wage advances to employees.”

For your reference, five takeaways:

1. Employers and employees alike should benefit:

“The law also permits employers to deduct certain amounts from an employee’s paycheck, for the payment of items such as gym memberships, parking or mass transit passes and day care, among many other items. Employers have long been frustrated by their inability to make these types of deductions, especially as they often benefit the employee as well as employee.” (Mintz Levin)

2. Employees must agree to the deductions:

“Such deductions must be expressly authorized in writing by the employee and be for the benefit of the employee. Employees must first be given written notice of all the terms and conditions of the deductions (and notification of any substantial changes after the deductions are established), and authorization must be voluntary.” (XpertHR)

3. The changes are temporary:

“The amendment will take effect on November 6, 2012, and expire three years later, unless the legislature takes action otherwise.” (Morgan Lewis)

4. There’s more to come:

“[T]he amendments include instructions for the NYDOL to issue regulations governing the timing and frequency of such deductions, as well as additional notice requirements and a requirement that employers implement a procedure that employees may use to dispute the amount of the deductions. As a result, while some employers may move forward and enter into voluntary wage deduction agreements with employees, others may decide to await the NYDOL’s regulatory pronouncements before implementing a program for the recovery of overpayments and pay advances.” (Proskauer)

5. Some questions remain:

“The law leaves open a number of questions, particularly concerning how New York courts will interpret ‘similar payments’ in light of § 193’s expansion. Though the categories of permissible deductions have increased in number and scope, employers should be cautious in making any deduction that does not fall directly into one of the [named] categories once the amendments to § 193 become effective.” (Patterson Belknap)

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