Since 2008, the New York State Department of Labor has taken an increasingly narrow and stringent view as to what can be considered a permissible wage deduction, even in situations where the employee had authorized the wage deduction and the deduction was something that was beneficial to the employee. In response to what was deemed to be an unduly restrictive view of the law, New York has now amended New York Labor Law § 193 to expand the categories of deductions that will be considered permissible. The law will go into effect on November 6, 2012, which is sixty days after Governor Cuomo signed the bill into law.

Prior to this amendment, the only statutorily recognized permissible wage deductions were those for tax withholdings, United States bond payments, labor union dues, insurance premiums, retirement contributions, and charitable contributions. The law now expands that list to include:

  • purchases at events sponsored by a bona fide charitable organization affiliated with the employer;
  • discounted parking or commuting passes;
  • fitness center or health club membership dues;
  • cafeteria or vending machine purchases made at the employer’s facility;
  • pharmacy purchases made at the employer’s place of business;
  • day care expenses; and
  • tuition, room, board and fees for nursery, primary, second and post-secondary education costs.

The other significant change to § 193 is that employers will now be able to take wage deductions to recoup overpayments of wages if an employee was overpaid due to a mathematical or other clerical error, and for repayments on advances of salary or wages. The law provides that the New York State Department of Labor will issue regulations to address the scope of this provision, including the size of the overpayments that may be recovered, the notice that will need to be provided to the impacted employee, the procedure for disputing the overpayment, and the “timing, frequency, duration and method of such recovery.”

Notably, the law has not obviated the need for employee consent to take the now permissible wage deductions, and has actually expanded an employer’s obligations related to the information it must provide an employee before it can make wage deductions. Specifically, the amended law requires employers to provide employees with written notice of the terms and conditions of the payment or benefits at issue and the details of how the deductions will be made. The employee must sign an authorization, which must be kept on file for the duration of the employee’s employment with the company, and for six years after the end of the employment. The law also specifies that the employer must provide advance notice of any change to the benefits that are the subject of the wage deduction, the amount of the deduction, or the manner in which the deduction will be made.

The law was passed with a sunset provision, providing that the law will automatically expire three years after its effective date. Nevertheless, this amendment is welcome news for New York employers struggling with the continuously increasing burdens under the New York Labor Law.