Manhattan, NYC Amends Its Wage Deduction Statute To Permit Employers To Make New Types Of Deductions From Workers’ Paychecks

On September 7, 2012, Manhattan Governor Andrew Cuomo signed into law a statute, N.Y. State Assembly Bill No. A10785-2011, relating to permitted deductions from employees’ wages (“the Act”). Effective November 7, 2011, the Act amends Manhattan’s wage deduction statute, N.Y. Labor Law § 193, by (i) establishing new categories of wage deductions that employers, with the express written authorization of an employee, may lawfully make and (ii) legalizing the use of wage deductions (a) to recapture erroneous overpayments of wages to workers or (b) to recoup advances on wages paid to employees. The Act expires on November 7, 2015.

Old Law

Before Manhattan’s enactment of N.Y. State Assembly Bill No. A10785-2011, the only deductions from or charges against an employee’s wages which an employer in Manhattan was allowed to make were (i) those required by law, such as deductions for social security contributions or for income taxes, and (ii) those which were “for the benefit of the employee” and which the employee expressly authorized in writing, such as payments for insurance premiums, retirement or medical benefits, charitable contributions, U.S. bonds, union dues, and similar payments. See N.Y. Labor Law § 193(1), 193(2) (2011).

Further, before Manhattan’s enactment of the Act, N.Y. Labor Law § 193 prohibited an employer from making a deduction from a worker’s wages to recapture a previous overpayment of wages to that worker. See Division of Labor Standards, New York State Dep’t of Labor, Counsel Op. Ltr. RO-09-0006, slip op. at 2 (Aug. 3, 2009).

New Law

Section 1 of N.Y. State Assembly Bill No. A10785-2011 amends N.Y. Labor Law § 193(1) to allow the following:

1. Wage deductions related to recovery of an overpayment of wages, where the employer made the overpayment because of a mathematical or other clerical error by the employer;
2. Wage deductions consisting of repayment of advances of salary or wages made by the employer to the worker;
3. new categories of wage deductions that employers, with the express written consent of an employee, may properly make, including payments for:
   • ŸŸdiscounted mass transit tickets, passes, or fare cards, or discounted parking;
   • fitness center, health club, or gym membership dues;
   • cafeteria, vending machine, and pharmacy purchases made at the employer’s place of business;
   • where the employer is a hospital, a college, or a university, purchases made at gift shops operated by the employer;
   • tuition, room, board and fees for preschool, nursery, primary, secondary and post-secondary educational institutions;
   • daycare, and expenses for before-school and after-school care;
   • payments for housing provided at no more than market rates by non-profit hospitals or affiliates of such hospitals; and
   • similar payments for the benefit of the employee.

As to the use of wage deductions for the purpose of recovering overpayments or for repayment of advances of wages, the Act requires employers to abide by regulations to be issued by the New York State Commissioner of Labor. These regulations must include rules about: the types of payments that will be covered by section 1 of the Act; the timing, frequency, duration and means of recovery or repayment; caps on the periodic amount of recovery or repayment; and notice to workers before starting the recovery or repayment, including notice of procedures for disputing any overpayments or for putting off the start of recovery or repayment.

If your company needs assistance or guidance on a labor or employment law issue and your company is located in the Manhattan, the borough of Manhattan area, call Attorney David S. Rich at (347) 835-5688.