On September 8, 2012, Governor Andrew Cuomo signed a much-anticipated law that amends New York Labor Law Section 193 by expanding the scope of permissible deductions from an employee’s wages. Currently, § 193 prohibits deductions from an employee’s wages unless a law, court, or government agency authorizes the deduction or the employee authorizes the deduction in writing and the deduction is for the benefit of the employee. N.Y. LAB. LAW § 193(1)(a)-(b). While the statutory language suggests that any deduction authorized by an employee and for the employee’s benefit would be permitted, the New York Department of Labor (NYDOL) has interpreted and applied this catchall provision narrowly.

The recent amendments, which will take effect on November 7, 2012, lift the NYDOL’s restrictive interpretation of the statute, and permit employers to deduct wages, with an employee’s written authorization, for:

  • (1) purchases made at certain charitable events;
  • (2) discounted parking or mass transit items;
  • (3) gym membership dues;
  • (4) cafeteria, vending machines, and pharmacy purchases at employer’s business;
  • (5) tuition, room, and board for certain educational institutions; and
  • (6) certain child care expenses. Importantly, the amendments also permit employers to recapture overpayments of the employee’s wages as well as repayments for loans or advancements the employer made to such employee.

Employers should be aware that the law imposes several administrative requirements that employers must comply with prior to deducting from an employee’s wages. First, employers must implement a procedure to enable the employee to dispute the amount of any overpayments, and provide notice of this procedure to the employee. Employers must also make account information available to the employee that details the total amount deducted and the individual expenditures within the categories of deductions. Finally, the law suggests that employers set a maximum aggregate amount that may be deducted from an employee’s wages, which will govern unless the employee establishes a lower amount (which can be as low as $10) of permissible deductions from that employee’s wages.

To read the full New York eAuthority, click here.

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