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Proposed Amendment to New York Wage Deduction Law Expected to Be Signed Into Law

August 13, 2012

The New York State legislature recently passed a bill, A10875-2011 (available here) that would amend Section 193 of New York Labor Law to allow employers to make some deductions from paychecks that are currently prohibited.  Governor Cuomo is expected to sign the law and has issued a memorandum supporting the legislation, which would take effect 60 days after enactment.

Currently, employers in New York are prohibited from making any deductions from an employee’s wages unless the deductions are either required by law (e.g. tax withholdings or Medicare contributions) or are for the “benefit of the employee” for things specifically listed in Section 193 such as  (i) insurance premium payments; (ii) pension or health and welfare benefits payments; (iii) contributions to charitable organizations; (iv) payments for United States bonds; and (v) payments for dues or assessments to a labor organization. Employers may also deduct payments that are "similar to" those listed in Section 193 and, in the aggregate, do not exceed 10 percent of the employee's gross wages for a payroll period.  Section 193 has been strictly construed by the NYS Department of Labor so that employers currently are prohibited from making most deductions not specifically listed in the statute, including a prohibition on deductions to recover mistaken wage overpayments or loan repayments.

The revised Section 193 would significantly change the Labor Law to allow deductions to recover wage overpayments, as well as the repayment of salary/wage advances, subject to regulations to be promulgated by the NYS Department of Labor.  These regulations would establish, among other things, the amounts that may be recovered, the frequency of such recovery, notice requirements, and a requirement that employers implement a procedure for an employee to dispute the amount of an overpayment or salary/wage advance.

Under the proposed amendments employers would also be allowed to make deductions for items such as  parking passes and mass transit fare cards, cafeteria and vending machine purchases at an employer's worksite, gym membership dues, tuition fees for pre-school through post-secondary school, and daycare expenses.  Before making any deduction an employer would first have to inform employees in writing about the purpose of the deduction and how the deductions would be made, and employers would be required to update the notice if the amount or terms and conditions of the deduction changed.  In addition, employees would still have to obtain the written employee authorizations currently required by Section 193.

The proposed amendments are set to expire 3 years following its effective date unless further legislative action is taken.