New York Expands Permissible Wage Deductions/Awaiting Governor Cuomo's Signature

Last week, the New York State Assembly and Senate passed amendments to Section 193 of the New York Labor Law ("NYLL") restoring employers' ability to make deductions from employee wages in a number of circumstances which the New York Department of Labor ("NYDOL") had opined were otherwise impermissible. In addition to the limited list of statutorily enumerated permissible deductions that already existed (e.g., insurance premiums; United States bonds; pension, health, and welfare benefits; union dues), the new amendments would allow employers to make deductions to recover pay advances, accidental overpayment of wages, deductions for purchases made at events sponsored by bona fide charitable organizations; discounted parking passes and mass transit vouchers; gym membership dues; cafeteria, vending machine and pharmacy purchases made at the employer's place of business; tuition, room, board and fees for educational institutions; day care expenses; and payments for housing provided at no more than market rates by non-profit hospitals. All such deductions will require the employee's voluntary written authorization. These amendments to the NYLL await Governor Cuomo's expected signature.

Section 193 of the NYLL prohibits employers from making deductions from employees' wages except those those which "are made in accordance with the provisions of any law or any rule or regulation issued by any government agency" or that "are expressly authorized in writing by the employee and are for the benefit of the employee." The statute limited authorized deductions to payments for "insurance premiums, pension or health and welfare benefit, contributions to charitable organizations, payment for United States bonds, payments for dues or assessments to a labor organization, and similar payments for the benefit of the employee."

As discussed in our June 2, 2010 client alert, the NYDOL had issued a series of Opinion Letters, beginning in late 2008, interpreting Section 193 of the NYLL narrowly so as to prohibit employers from recouping accidental wage overpayments via wage deductions, as well as prohibiting employers from making wage deductions where wages had been advanced to employees and, similarly, prohibited employers from using wage deductions as the mechanism for repayment of tuition assistance – in all cases, even when the employee's consent was voluntary. Bill Number A10785 amends Section 193 of the NYLL, greatly expanding the employer's ability to make a...