New York Legislature Loosens Strict Interpretation Of Unlawful Deductions From Wages

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The New York State Senate and Assembly recently passed legislation that amends New York Labor Law § 193 by expanding the scope of permissible deductions from an employee’s wages. The amendments, which are awaiting final passage by the Assembly and then Governor Andrew Cuomo’s signature, will take effect 60 days after the bill becomes law.

Currently, Section 193 prohibits deductions from an employee’s wages unless a law, court, or government agency authorizes the deduction or the employee authorizes the deductions in writing and the deduction is for the benefit of the employee. N.Y. Labor Law § 193(1)(a)-(b). While the statutory language suggests that any deduction authorized by an employee and for the employee’s benefit would be permitted, the New York Department of Labor (NYDOL) has interpreted and applied this catchall provision narrowly. The NYDOL has stated that employers may deduct from wages for items such as insurance premiums and pension contributions, but may not deduct for items such as the repayment of employee loans or advances or the recoupment of an inadvertent overpayment of wages.

The recent amendments would lift the NYDOL’s restrictive interpretation of the statute and permit employers to deduct wages with an employee’s written authorization for: (1) purchases made at certain charitable events; (2) discounted parking or mass transit items; (3) gym membership dues; (4) cafeteria, vending machines, and pharmacy purchases at employer’s business; (5) tuition, room, and board for certain educational institutions; and (6) certain child care expenses. Importantly, the amendments also would permit deductions for the repayment of wage advances and for the recovery of wage overpayments made where the overpayment was due to the employer’s mathematical or clerical error.

Employees and employers will likely benefit from this more lenient, and administratively convenient, approach to permissible deductions from wages. However, employers should not revise their deductions policies until the law takes effect and should monitor for any guidance or regulations issued by the NYDOL interpreting the new amendments.

Note: This article was published in the August 2012 issue of the New York eAuthority.