FAQ: Making Wage Deductions to Recover Inadvertent Overpayment of Wages and Repayment of Advances to Employees

Can I make deductions from employee wages to recover overpayment of wages or repayment of advances given to my employees? When? How?

These are questions that arise often for many employers. Until last year, such wage deductions were prohibited. However, legislation signed into law in September 2012 amended New York’s wage deduction law, N.Y. Labor Law §193, and expanded the categories of deductions that employers may take from employees’ wages, including for recovery of inadvertent overpayments and advances. The legislation, which took effect in November 2012, also requires such wage deductions to comply with regulations issued by the New York Department of Labor. See our prior L&E Alert, New York Eases Rules on Deductions from Employee Wages (October 2012).

On May 22, 2013, the New York State Department of Labor published proposed regulations that would govern newly authorized wage deductions. The agency accepted public comment on the proposed regulations through July 6, 2013. Although the regulations are not yet in final form and are subject to potential revision, we believe they offer important guidance on the parameters of permitted wage deductions. To help employers gain a better understanding of these parameters, we provide below several “Frequently Asked Questions” and answers about the amended wage deduction law and the proposed regulations.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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