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May 23, 2013

NYDOL Issues Proposed Wage Deduction Regulation

The New York State Department of Labor (“NYDOL”) has published for public comment a proposed wage deduction regulation.  The proposed regulation implements the Wage Deduction Law that took effect November 6, 2012 (see our previous alerts on the Wage Deduction Law: Governor Cuomo Signs into Law Wage Deduction Bill, New York State Legislature Passes Wage Deduction Bill). The Wage Deduction Law amended Section 193 of the Labor Law to expand the types of lawful deductions that an employer may make from the wages of its employees.

The following are some highlights of the proposed regulation:

  • Prohibited deductions.
    • Employee purchases of tools, equipment and attire required for work;
    • Recoupment of unauthorized expenses;
    • Repayment of employer losses, including for spoilage and breakage, cash shortages, and fines or penalties incurred by the employer through the conduct of the employee;
    • Fines or penalties for tardiness, excessive leave, misconduct, quitting without notice;
    • Contributions to political action committees, campaigns and similar payments;
    • Fees, interest or the employer’s administrative costs.

  • Employee authorization.  Certain deductions must be authorized by the employee.  A deduction is deemed “authorized” if it is set forth in a collective bargaining agreement or a written agreement between the employer and the employee that is “express, written, voluntary and informed.”  An authorization is “informed” if the employee is provided with a written notice of all terms and conditions of the deduction, its benefit, and the details of the manner in which deductions are made.

  • Deductions for overpayments.  The Wage Deduction Law now permits an employer to make deductions for an overpayment of wages where such overpayment is due to a mathematical or other clerical error by the employer.  The proposed regulation imposes the following conditions on such deductions:
    • At least three (3) weeks prior to commencing deductions, the employer must give the employee a “Notice of Intent” containing the details of the overpayment; the total amount to be deducted; the date and amount of each deduction; and details of the procedure by which the employee may contest the overpayment.  If the entire amount may be reclaimed in one pay period, only three (3) days’ notice is required.
    • The employer may only recover overpayments that were made in the eight (8) weeks prior to the issuance of the Notice of Intent.
    • The employer has six (6) years to make to deductions to recover overpayments.
    • If the amount of the overpayment exceeds an employee’s net wages for the pay period, the recovery is capped at 12.5% of the gross wages earned in that wage payment.  The deduction must not reduce the effective hourly wage below the statutory minimum (currently $7.25).
    • The employer must implement the procedure specified in the proposed regulation to allow employees to contest overpayments.

  • Deductions for advances. The Wage Deduction Law now permits an employer to make deductions for repayment of advances of salary or wages made by the employer to the employee. The proposed regulation imposes the following conditions on such deductions:
    • Fees and interest may not be included.
    • The employer and the employee must agree in writing to the details of the advance, including the timing and duration of the repayment.
    • The employee must also give written authorization for the deductions, which must include the details of the deductions and the procedure for contesting deductions.
    • The employer must implement the procedure specified in the proposed regulation to allow employees to contest the amount and/or frequency of the deductions.

 The NYDOL will accept comments on the proposed regulation via email at regulations@labor.ny.gov until July 6, 2013.  Please note that this is a proposed regulation; it does not yet carry the force of law.  It remains to be seen when and in what final form the regulation will be implemented.

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If you have any questions regarding the proposed regulation, please do not hesitate to contact us. 

Putney, Twombly, Hall & Hirson LLP