Governor Cuomo Signs NY Wage Deduction Amendments Into Law

On September 7, 2012, Gov. Andrew M. Cuomo signed legislation expanding the scope of permissible employee wage deductions in New York.  The amendments increase employers’ ability to make wage deductions.  The new law takes effect on November 6, 2012, however it contains a sunset provision and will expire after three years unless further legislative action is taken to extend it. In adopting the legislation, Governor Cuomo recognized that the law in its current form unduly restricts employees from deducting payments from their paychecks for valuable services provided by employers.  The legislation also greatly benefits employers who may now more easily recover salary or wage advances and inadvertent overpayments. Currently, NYLL § 193 permits New York employers to deduct employee wages in limited circumstances such as for tax deductions, Medicare contributions, insurance premium payments, health and retirement benefits, contributions to charitable organizations and union dues.  Much to the frustration of employers, deductions may not be made to recover salary or wage advances and inadvertent overpayments. The new legislation significantly expands employers’ ability to make wage deductions. Most significantly, employers will be able to make wage deductions to recover wage or salary overpayments due to mathematical or clerical mistake and wage or salary advances.  In order to do so, employers will be required to comply with regulations to be promulgated by the NYDOL.  The regulations will dictate, among other things, notice requirements, the maximum amounts which may be recovered, the frequency of recovery and procedures employers must establish to allow employees to dispute overpayment or advancement amounts. Beyond overpayments and advances, the new legislation will also permit employers, with appropriate employee consent, to make deductions for:

• Discounted mass transit tickets;
• Fitness, health club and gym membership dues;
• Cafeteria, vending machine and pharmacy purchases made at the employer’s place of business, and gift shops run by hospitals, colleges and universities;
• Tuition, room and board and fees for nursery, primary, secondary and post-secondary education costs; and
• Daycare, before-school and after-school care expenses. 

The new law also establishes that, with limited exceptions, employee consent may be revoked in writing at any time, and employees must be fully informed of terms and conditions of deductions. As the amendments make clear, deductions made in connection with employer-sponsored, pre-tax contributions are permitted under New York law.  However, the amendments do not increase any aspect of what constitutes a permissible pre-tax deduction.  Therefore, the newly authorized deductions are after-tax deductions. New York employers and employees will benefit from the convenience of expanded wage deductions.  In the time leading up to the amendments’ November 6 effective date and the issuance of new NYDOL wage deduction regulations, employers should review current wage deduction practices, plan for the impact of new deductions, train appropriate supervisors and human resources professionals on the changes to permissible wage deductions and inform employees of their new rights under the law.  As always, employers should confer with counsel to ensure wage deductions are made in accordance with the law. For more information on how to take advantage of the benefits afforded to employers under the amendments to NYLL § 193, please contact John R. Vreeland, Esq., jvreeland@genovaburns.com or Douglas J. Klein, Esq., dklein@genovaburns.com in our Labor Law Practice Group.