New York Expands Scope of Wage Deduction Statute

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On September 7, 2012, Governor Andrew Cuomo signed into law amendments to New York Labor Law § 193, which expands the scope of permissible deductions an employer may make from an employee’s paycheck.  The new law will go into effect on November 6, 2012.

Section 193 currently permits withholdings only for taxes, United States payment bonds, labor union dues, insurance premiums, retirement contributions, and charitable donations.  The amendment now permits, with the employee’s authorization, withholdings for the following:

  • prepaid legal plans;
  • purchases at events sponsored by a bona fide charitable organization affiliated with the employer;
  • discounted parking passes or commuting passes;
  • fitness center, health club, and/or gym membership dues;
  • cafeteria and vending machine purchases made at the employer’s place of business;
  • purchases at gift shops operated by the employer, where the employer is a hospital, college, or university;
  • tuition, room, board, and fees for preschool, nursery, primary, secondary, and/or post secondary educational institutions;
  • day care and before/after care expenses; and
  • housing by non-profit hospitals and affiliates thereof.

Perhaps most significantly, the amendment permits an employer to make withholdings to recover overpayments of wages made to employees due to a mathematical or clerical error by the employer.  The New York Department of Labor will issue regulations, pursuant to the amendment, regarding the procedure for making such a withholding.

The amendment also contains provisions requiring employers to give employees written notice of the terms and conditions of payment of wages and/or benefits, and details regarding the manner in which deductions will be made.  In addition, employers are required to obtain written authorizations from employees before making an increased deduction from wages and must maintain the authorization during the course of the employee’s employment and for six years thereafter.

Employers who employ workers in New York should review their pay policies to ensure compliance with the new law and make any necessary changes to update their policies and practices.

As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.

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