Update: New York Extends Permissible Deductions from Wages until November 2018

Governor Cuomo has signed legislation, Assembly Bill A07594/S05623, immediately extending for three years the 2012 amendments to the New York Labor Law that permit employers to make deductions from wages for items such as overpayments and advances against wages, subject to certain procedures governed by Labor Department regulations.  The amendments also permit deductions from wages for additional items such as parking passes, health club memberships and employee cafeterias with the written permission of the employee.

The amendments were set to expire on November 6, 2015 but have been extended by the legislation to November 6, 2018.

On November 6, 2015, amendments to the New York Labor Law (NYLL) that expanded permitted deductions from wages for overpayments and advances against wages, among other items, will expire.

In 2012, New York expanded the allowable deductions that employers may make from their employees’ pay.  Effective November 6, 2012, § 193 of the NYLL was amended to permit employers to make deductions from wages for overpayments due to mathematical and clerical errors, and for repayments of wage advances, provided the employer complied with the regulatory procedures for such deductions established by the New York State Department of Labor.1 The 2012 amendments also permitted deductions for additional items with the written consent of the employee, including discounted parking or passes, fare cards or vouchers related to mass transit, fitness health club memberships, purchases in the cafeteria, in vending machines and in the pharmacy on the employer’s premises, and tuition, room, board and fees related to certain educational institutions.

The amendments that allowed these deductions will expire on November 6, 2015, barring last minute legislative action. Because the New York State Legislature is out of session until January 2016, and has taken no action to extend the amendments, the law will revert back to the rigid restrictions on deductions from wages that existed prior to November 2012.

Prior to November 2012, the NYLL permitted deductions only for items authorized by law, such as tax withholding, and for items authorized in writing and “for the benefit of the employee,” such as insurance premiums, pension or health and welfare benefits, contributions to charitable organizations, payments for United States bonds, and payments for dues or assessments to a labor organization. The statute in effect before November 2012 did not permit deductions for accidental overpayments, advances of wages, or several other items commonly allowed in other states.  The 2012 amendments were necessitated by several opinion letters of the New York Department of Labor which held that § 193 prohibited deductions for wage overpayments, advances and other common items not explicitly listed in the statute, even with the express written consent of the employee.

In light of the expiration of these amendments, employers should review automatic deductions from their employees’ wages, and halt those deductions that are not “for the benefit of the employee,” such as taxes, insurance premiums, pension, health and welfare benefits, union dues and assessments, and similar items.   Existing deductions for overpayments and advances should be suspended until the issue is addressed by the state legislature.