Wednesday, September 12, 2012

Amendments To Employee Wage Deductions In New York

New York's Governor Cuomo has signed legislation amending New York Labor Law §193 which restores to employers the ability to make certain deductions from employee wages in a number of instances; the New York Department of Labor (the “NYSDOL") had determined previously (via opinion letters) that such deductions were impermissible, even with the employee's consent. The legislation becomes effective on November 9, 2012.

The new amendments allow New York employers to make deductions (in addition to those existing currently under the statute) with respect to pay advances; accidental overpayment of wages; purchases made at events sponsored by bona fide charitable organizations; discounted parking passes and mass transit vouchers; gym membership dues; cafeteria, vending machine and pharmacy purchases made at the employer's place of business; tuition, room and board and fees for educational institutions; day care expenses; and payments for housing provided at no more than market rates by nonprofit hospitals.

Before an employer may take any of these additional deductions, the employer must: (i) provide the employee with written notice of the terms and conditions of the payment and its benefits; (ii) provide a written explanation of how the employer will take the deductions; and (iii) obtain the employee’s written, voluntary consent to the deduction. The employee’s consent may be revoked at any time. The employer must retain each authorization for at least six (6) years following the termination of the employee’s employment. Employees may also consent to a deduction through a collective bargaining agreement.

Interestingly, the amendments contain a "sunset provision" that automatically extinguishes the newly identified wage deductions on November 9, 2015. Accordingly, the State Legislature will likely revisit this issue at a later date to determine whether the new law is working; if it is, the "sunset provision" may be revoked.

The NYSDOL is required to issue regulations governing the timing and frequency of deductions and notice requirements, including a procedure that the employee may use to dispute the amount of the deduction. Employers are cautioned that they may wish to wait until after the NYSDOL issues its regulations, and the effective date of the new legislation, before entering into any wage deduction agreements with employees or taking any action with respect to wage deductions not permitted by statute currently.

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