Effective
November 6, 2012, employers in New York will have greater flexibility when it
comes to deductions from employee wages. The new amendment to New York Labor
Law Section 193 expands the list of permissible employer deductions from wages (other
than withholding taxes and insurance premiums, etc.) with an employee’s
written consent and allows deductions for overpayments due to clerical or
mathematical errors or for repayment of advances on wages or vacations paid to
employees.
Bottom Line
This is good news for employers and employees! Effective
November 6th, employers will be able to offer employees benefits,
such as advances on salary and vacation, direct payment of transportation
passes, child care, etc., without violating New York Department of Labor (NY DOL) regulations. Before this amendment, these payroll
deductions were not permitted, even if both employer and employee agreed to
them.
Employers should review and update their wage deduction
policies before making any deductions and ensure that methods of deduction and
recordkeeping for documenting these deductions are in accordance with this amendment
and NY DOL regulations.
If you have any questions, or would like to discuss this
topic in further detail, please contact me or visit my website.
A
Little History
Prior to
this amendment, Section 193 provided that no wage deductions could be
made unless they were either provided for by law or by government agency
rule, or they were (i) expressly
authorized in writing by the employee and (ii) for the benefit of the employee, (i.e., “limited to payments for
insurance premiums, pension or health and welfare benefits, contributions to
charitable organizations, payments for United States bonds, payments for dues
or assessments to a labor organization, and similar payments for the benefit of
the employee.”).
A Lot
of Progress
Beginning
on November 6, 2012, employers will have greater rights to take deductions from
employee wages. This will allow
employees to use payroll deductions to obtain certain privileges that are “for
the benefit of the employee.”
The following new deductions
can be authorized in writing by an employee:
• Prepaid legal plans;
• Purchases made at events sponsored by a
bona fide charity that is affiliated with the employer, provided that at least
20 percent of the event’s profits are contributed to such charity;
• Discounted parking or discounted passes,
tokens, fare cards, vouchers, or other items that enables an employee to use
mass transit;
• Dues for a fitness center, health club, or
gym membership;
• For hospital, college and university
employers, employee purchases at a cafeteria, gift shop and vending machine at
the employer’s place of business;
• Pharmacy purchases at the employer’s place
of business;
• Tuition, room and board, and fees for
pre-school, nursery, primary, secondary, and post-secondary educational
institutions;
• Day care and other before-school and
after-school expenses;
• Payments for housing provided at no more
than market rates by nonprofit hospitals or their affiliates.
Other
Permissible Deductions
Effective November 6th,
employers will be able to make deductions from wages for these previously
prohibited reasons:
• An employer may deduct from wages to recover an overpayment of wages,
where the overpayment is due to a mathematical or clerical error by the
employer. In doing so, the employer must comply with regulations that will be
promulgated by the DOL for this type of deduction, and which will provide for,
among other things, the size of overpayment subject to this permissible
deduction; the timing, frequency, duration and method of the employer’s
recovery; the notice required to be given to the subject employee; and a
mechanism for the subject employee to dispute the attempted recovery.
• An employer may deduct from wages in order
to obtain repayment of advances of
salary or wages. The employer must comply with DOL regulations for this
type of deduction.
NB: These
amendments will expire and automatically be deemed to be repealed in three
years – i.e., on November 6, 2015.
New York legislature will have to renew these amendments before on or by
this date.
The Proper
Way to Deduct from Wages
•
Any wage deduction must still be voluntary, and made only after the
employer gives written notice to the
employee of the terms and conditions of the deduction and the details of
how the deduction will be made.
•
The employer must notify the
employee of any substantial change in the terms or conditions of the deduction
(including the amount of the deduction), before implementing the change.
•
The employer must maintain the employee’s
written authorization for the deduction for the entire period of that employee’s employment, and for six years after
such employment ends.
If you have any questions, or would like to discuss this
topic in further detail, please contact me or visit my website.
