[authors: Eric Raphan and Jonathan Sokolowski]
As an update to an earlier article, on September 7, 2012, Governor Cuomo signed a bill into law which permits employers to make additional deductions from employees’ paychecks. Bill A10875-2011 (available here) amends New York Labor Law Section 193 (“Section 193”) to provide new categories of wage deductions that employers will be permitted to take with an employee’s consent. The amendments to Section 193 will take effect on November 6, 2012.
Under existing law, employers cannot make any deductions from employees’ wages unless such deductions are either authorized by law (e.g. tax withholdings or Medicare contributions) or are expressly enumerated in Section 193. Section 193 permits wage deductions for: (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. Additionally, employers may also deduct payments that are “similar to” those listed above and, in the aggregate, do not exceed 10 percent of the employee’s gross wages for a payroll period. These wage deduction categories have been narrowly construed by state courts and the New York State Department of Labor (“NYSDOL”), and employers are currently prohibited from making deductions for, among other things, gym membership dues, purchases at employer cafeterias, parking passes, or day care expenses. Significantly, employers are also prohibited from making deductions to recover inadvertent wage overpayments and salary advances.
The amendments to Section 193 permit employers to make numerous new deductions including deductions for gym membership dues, discounted parking passes and mass transit fare cards, cafeteria and vending machine purchases at an employer’s worksite, tuition fees for pre-school through post-secondary school, and daycare expenses. Prior to making these deductions, employers will be required to provide employees a written notice detailing the purpose of the deductions and the manner in which they will be made. The amendments specify that this notice must be updated whenever there is a substantial change in the manner of the deduction, the amount of the deduction, or in the terms and conditions of the payment the deduction is being made for. Employers will be obligated to comply with these enhanced notice requirements in addition to obtaining the written employee authorizations currently required by Section 193.
The amendments also authorize deductions to recover accidental wage overpayments, and the repayment of salary/wage advances, subject to regulations which will be promulgated by the NYSDOL. These regulations will 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 disputing the amount of an overpayment or salary/wage advance.
Finally, employers should take note that the amendments contain what is essentially a 3-year trial period as they are set to expire 3 years following the November 6, 2012 effective date unless further legislative action is taken.