September 12, 2012

ALERT

▪ Contact   ▪ Resources   ▪ Comments/Questions

Governor Cuomo Signs Amendment to New York Wage Deduction Law

Since 2008, the New York State Department of Labor has taken an increasingly narrow and stringent view as to what can be considered a permissible wage deduction, even in situations where the employee had authorized the wage deduction and the deduction was something that was beneficial to the employee. In response to what was deemed to be an unduly restrictive view of the law, New York has now amended New York Labor Law § 193 to expand the categories of deductions that will be considered permissible. The law will go into effect on November 6, 2012, which is sixty days after Governor Cuomo signed the bill into law.

Prior to this amendment, the only statutorily recognized permissible wage deductions were those for tax withholdings, United States bond payments, labor union dues, insurance premiums, retirement contributions, and charitable contributions. The law now expands that list to include:

• purchases at events sponsored by a bona fide charitable organization affiliated with the employer;
• discounted parking or commuting passes;
• fitness center or health club membership dues;
• cafeteria or vending machine purchases made at the employer’s facility;
• pharmacy purchases made at the employer’s place of business;
• day care expenses; and
• tuition, room, board and fees for nursery, primary, second and post-secondary education costs.

The other significant change to § 193 is that employers will now be able to take wage deductions to recoup overpayments of wages if an employee was overpaid due to a mathematical or other clerical error, and for repayments on advances of salary or wages. The law provides that the New York State Department of Labor will issue regulations to address the scope of this provision, including the size of the overpayments that may be recovered, the notice that will need to be provided to the impacted employee, the procedure for disputing the overpayment, and the “timing, frequency, duration and method of such recovery.”

Notably, the law has not obviated the need for employee consent to take the now permissible wage deductions, and has actually expanded an employer’s obligations related to the information it must provide an employee before it can make wage deductions. Specifically, the amended law requires employers to provide employees with written notice of the terms and conditions of the payment or benefits at issue and the details of how the deductions will be made. The employee must sign an authorization, which must be kept on file for the duration of the employee’s employment with the company, and for six years after the end of the employment. The law also specifies that the employer must provide advance notice of any change to the benefits that are the subject of the wage deduction, the amount of the deduction, or the manner in which the deduction will be made.

The law was passed with a sunset provision, providing that the law will automatically expire three years after its effective date. Nevertheless, this amendment is welcome news for New York employers struggling with the continuously increasing burdens under the New York Labor Law.

For more information about this alert please the following lawyers:

You are receiving this communication because we believe you have an existing business relationship with Orrick or have previously indicated your desire to receive such communications. You may manage your Orrick newsletter subscriptions here: Manage Subscriptions.  Or, you may unsubscribe from all Orrick publications at once by e-mailing unsubscribe@orrick.com.  Otherwise, to ensure future delivery of Orrick communications, please add publications@orricklawfirm.com to your safe sender list or address book.

Orrick, Herrington & Sutcliffe (Europe) LLP is a limited liability partnership registered in England and Wales under number OC347108 and is a multinational practice of registered and foreign lawyers and English solicitors. The term partner is used to refer to a member of Orrick, Herrington & Sutcliffe (Europe) LLP or an employee or consultant with equivalent standing and qualifications, or an individual with equivalent status at an Orrick Entity. A list of members of Orrick, Herrington & Sutcliffe (Europe) LLP and their professional qualifications is open to inspection at our registered office, 107 Cheapside, London EC2V 6DN. Authorised and regulated by the Solicitors Regulation Authority. Orrick, Herrington & Sutcliffe (Europe) LLP or an affiliated undertaking (each such undertaking being an "Orrick Entity") has an office in Beijing, Berlin, Dusseldorf, Frankfurt, Hong Kong, London, Los Angeles, Milan, Moscow, Munich, New York, Orange County, Paris, Portland, Rome, Sacramento, San Francisco, Seattle, Shanghai, Silicon Valley, Taipei, Tokyo and Washington, D.C.

Attorney advertising. As required by New York law, we hereby advise you that prior results do not guarantee a similar outcome.
© 2012 Orrick, Herrington & Sutcliffe LLP, 51 West 52nd Street, New York, NY, 10019-6142, +1-212-506-5000.