On September 7, 2012, Governor Cuomo signed into law an amendment to New York Labor Law § 193, which permits employers to make additional deductions from employees' paychecks. The amendment was passed in the New York State Legislature on June 21, 2012, Bill A10875-2011, and was expected to be signed into law by Governor Cuomo, who had already issued a memorandum supporting the legislation.
Prior to the amendment, Labor Law § 193 only permitted employee wage deductions when the deductions were allowed by law (e.g., state and federal tax withholdings and wage garnishments for child or spousal support) or expressly authorized under Section 193. Deductions expressly permitted were: (i) payments for insurance premiums; (ii) payments for pension or health and welfare benefits; (iii) contributions to charitable organizations; (iv) payments for United States bonds; and (v) payments for dues or assessments to a labor organization. Deductions similar to these five categories were also permitted if they were for the benefit of the employee, expressly authorized by the employee and did not exceed ten percent (minus required deductions) of the employee's gross wages for the pay period. Wage deductions were not permitted for, among other things, the purchases of goods and services provided by employers (e.g., gym memberships and cafeteria and vending machine purchases); repayment of advances, loans or debts; recovery of employment-related expenses, spoilage or breakage; and cash register shortages.
The recently enacted amendment to Section 193, however, establishes additional categories of permissible wage deductions that may be taken by the employer with the employee's consent. Specifically, the new permissible wage deductions on employee voluntary consent include payments for:
- the employee's use of mass transit, such as discounted parking or passes, tokens, fare cards and vouchers;
- fitness centers, health clubs and/or gym membership dues;
- cafeteria and vending machine purchases made at the employer's place of business and purchases made at employer-operated gift shops where employer is a hospital, college or university;
- pharmacy purchases at employer's place of business; and
- tuition, room, board and fees for pre-school, nursery, primary, secondary and/or post-secondary school educational institutions.
Before an employer may make such deductions, the employer must comply with the amendment's enhanced notice and authorization requirements. The employee must voluntarily give the employer written authorization to take deductions following the employee's receipt of written notice from the employer detailing the terms and conditions of the payment and/or its benefits and the details of the manner in which deductions will be made. The employer must keep employee written authorizations on file during the employee's employment and for six years after such employment ends. The amendment also provides that the employer must, as soon as practicable and before any increase in deductions, notify the employee of any substantial change in the terms and conditions of the deductions, such as any change in the amount of the deductions, a substantial change in the benefits of the deductions or the details in the manner in which the deductions shall be made.
In addition to the above, the amendment also permits employers to make deductions to recover overpayment of wages due to the employer's mathematical or other clerical error, and repayment of advances of salary or wages.
The amendment to Section 193 takes effect 60 days from its date of enactment. However, employers will likely have to wait longer to take advantage of at least some of these new deductions. In particular, the amendment provides that the New York Department of Labor is to issue regulations governing wage overpayments and repayments on advances, among other things, the timing, frequency, duration and method of such recovery or repayment, notice requirements and dispute procedures. Employers should also be aware that the amendment is set to expire three years from the date of enactment, unless the legislature is able to, and does, revoke this sunset provision.