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Our attorneys stay on top of changes in legislation, agency regulations, case law, and industry trends—then craft timely legal alerts to keep clients up to date on legal developments important to their business.

November 9, 2012

Amendment to New York Labor Law Expands the Scope of Permissible Wage Deductions

Effective Tuesday, November 6, 2012, Section 193 of the New York Labor Law will be amended to expand the scope of permissible deductions which employers may take from their employees' wages.

Traditionally, the New York Labor Law prohibited employers from taking deductions from employees' pay unless the deductions were for the benefit of the employee and fell within certain limited categories, including payments for insurance premiums, pension, health and welfare benefits, contributions to charitable organizations, dues to a labor organization, or payments for United States Bonds.

As of November 6, 2012, the amendment will allow employers to take wage deductions for numerous reasons that were previously prohibited, including:

  • Prepaid legal plans; 
  • Purchases made at charitable events sponsored by an organization affiliated with the employer; 
  • Discounted parking or discounted passes, tokens, fare cards, vouchers or other items that entitle the employee to use mass transit; 
  • Fitness center, health club, and/or gym membership dues; 
  • Cafeteria and vending machine purchases made at the employer's place of business, 
  • Purchases made at gift shops operated by the employer, where the employer is a hospital college or university; 
  • Pharmacy purchases made at the employer's place of business; 
  • Tuition, room, board, and fees for pre-school, nursery, primary, secondary, and post-secondary education institutions; 
  • Day care and before- and after-school care expenses; 
  • Payments for housing provided at no more than market rates by non-profit hospitals or affiliates; and 
  • Similar payments for the benefit of the employee.

The amendment will also allow employers to deduct from employees' wages to recover for inadvertent wage overpayments, and advances in pay and vacation, which employers were traditionally unable to recoup through a wage deduction. According to the amendment, the Commissioner of Labor is now tasked with creating regulations which will limit the periodic amount of such repayment and which will establish a procedure by which employees may dispute the amount of such repayment or seek to delay commencement of the repayment.

The amendment additionally requires that employers comply with other deduction-related procedures. Specifically, employers may deduct from an employee's wages as long as the employer first provides written notice to the employee of all terms and conditions of the payment and/or its benefits and the details of the manner in which the deduction will be made. Only upon receiving such written notice may an employee voluntarily authorize his/her employer, in writing, to make the deduction for the benefit of the employee. If at any time thereafter, there is a substantial change in the amount of the deduction, or a substantial change in the benefits of the deduction, an employer must notify the employee prior to the implementation of such change. In addition, the amended statute now places a limitation on the total aggregate amount of wage deductions per employee for each pay period and requires that employers provide their employees with access to current account information detailing individual expenditures in the deduction categories.

Finally, employers under the amendment must now keep any "written authorization" required under §193 for the respective employees' entire period of employment and, then, for an additional six (6) years after the end of that employment.

Despite the expansion of the scope of permissible wage deductions, employers should still use caution in deducting from an employee's wages and complying with the appropriate deduction limitations and notice and record-keeping procedures.

If you have any questions concerning the newly amended wage deduction statute, please contact an attorney in Hiscock & Barclay's Labor & Employment practice area.

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