New York State Department of Labor Adopts New Wage Deduction Regulations

by Mintz Levin - Employment Matters

The New York State Department of Labor has finally released regulations interpreting the Wage Deduction Law that New York amended nearly a year ago. At last, I can sleep at night. Here are my 5 quick takeaways from those regulations, which are relatively easy to read and can be accessed here

  1. You really need to audit your wage deduction practices. If you haven’t thought about this issue for some time, there’s a reasonably good chance you were doing it wrong before, and if you don’t pay attention to this issue now, there’s an even better chance you’ll be doing it wrong in the future. Now is the time to perform the necessary administrative housekeeping on this issue, especially when it can help you avoid a costly lawsuit.
  2. Stick to the script. The amended Wage Deduction Law allows for employers to make additional types of deductions, but the list of permissible deductions remains pretty specific and narrow. Sure, the law also includes a catch-all provision allowing employers to make any deduction for any “similar payment for the benefit of the employee,” but I wouldn’t put great faith in that provision. It is likely that the DOL and the courts will continue to interpret this provision narrowly; to fall within its scope, the deduction has to provide the employee with a health or welfare, pension and savings, charitable, representational, transportation, or food and lodging benefit. In other words, if you aren’t sure whether the deduction is permissible, we’d recommend erring on the side of caution and against the deduction.
  3. Remain aware of the deductions that the regulations specifically prohibit. If you are deducting amounts from wages for any of these items, you should stop immediately: (a) repayments of loans, advances, and overpayments that fail to follow the regulations strict guidelines (see below); (b) employee purchases of tools, equipment and attire required for work; (c) recoupment of unauthorized expenses; (d) repayment of employer losses, including for spoilage and breakage, cash shortages, and fines or penalties incurred by the employer through the conduct of the employee; (e) fines or penalties for tardiness, excessive leave, misconduct, quitting without notice; (f) contributions to political action committees, campaigns and similar payments; and (g) fees, interest or the employer’s administrative costs.
  4. Employee convenience is not the same thing as employee benefit. While employers welcomed the amendments to the Wage Deduction Law because it expanded the scope of permissible deductions, the Law did not go so far as to permit deductions for the convenience of employees. The regulations note that convenience, while often associated with many of the permitted deductions, is not, by itself, a benefit to the employee. For example, providing an employee with a small loan to purchase or operate a computer or mobile device, while certainly convenient to the employee, would likely be an impermissible deduction since it does not provide the types of benefits to the employee that the Law addresses.
  5. Follow the guidelines addressing advances and overpayments. The regulations provide detailed requirements for processing deductions for overpayments and salary advances, including (a) obtaining employee authorizations, (b) employer notice and recordkeeping requirements, (c) the timing, frequency and duration of such deductions, (d) deduction amount limits; and (e) deduction dispute resolution. Employers must review these regulations carefully to ensure that they are in compliance, especially with respect to the dispute resolution procedures – with a failure to implement creating a presumption that the deduction was impermissible. Seriously, pay attention: the very last regulation even goes so far as to require employers to utilize at least a 12-point font when communicating with employees about deductions. No word on font types though; I am however, partial to Rockwell Extra Bold for no reason other than it sounds like I’m ordering a lively, yet mysterious micro-brew.

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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