Effective November 6, 2012, amendments to Section 193 of the New York Labor Law (“NYLL”) will expand the list of items that private sector employers may deduct from employee paychecks to include, among other things, repayment of pay advances and overpayment of wages. Employers will welcome this amendment to the current version of the law, which limits permissible deductions only to those made for United States bonds, insurance premiums, pension contributions, charitable donations, and payments due to labor organizations (such as union dues).

The amendments direct the New York Department of Labor to issue regulations governing the timing and frequency of deductions, notice requirements, as well as a requirement that employers implement a procedure for employees to dispute a particular deduction. Until those regulations are released, New York employers should refrain from making any immediate changes in their current practices as they relate to wage deductions. We will keep our readers updated when the new regulations issue.

In addition to those already mentioned, other payroll deductions permitted by the amended law are:

  • Payments for prepaid legal plans;
  • Contributions made to bona fide charitable organizations;
  • Purchases made at events sponsored by bona fide charitable organizations;
  • Discounted parking and mass transit expenses (e.g. vouchers, far cards, and tokens);
  • Fitness center and/or gym membership dues;
  • Cafeteria and vending machine purchases made at the employer’s place of business and purchases made at gift shops operated by the employer, where the employer is a hospital, college, or university;
  • Pharmacy purchases made at the employer’s place of business;
  • Tuition, room, board and fees for pre-school, nursery, primary, secondary, and/or post-secondary education intuitions; and
  • Housing payments (provided by non-profit hospitals and their affiliates).

Employers have the discretion whether to offer or allow for one of the newly permissible deductions. If employers choose to do so, they must provide employees with written notice of the terms and conditions as well as an explanation as to how the deduction will be made. In turn, employees must affirm and authorize in writing the specific deduction, which employers must keep on file for six years. Except for deductions authorized by a collective bargaining agreement, the employee may revoke authorization for a particular deduction at “any time” and the deductions must cease “as soon as practicable.”

Given this development, now is a good time for employers with operations in New York to communicate with experienced wage and hour counsel regarding strategies to avoid wage and hour litigation. If you have any questions, please feel free to contact any of the attorneys in the Gibbons Employment & Labor Law Department.