Employment-New York Expands The Items Which May Be Deducted From Wages

In an amendment to section 193 of the New York State Labor law, the items which may be deducted from an employee’s wages has been expanded. The amendment becomes effective on November 6, 2012 (and will expire on November 6, 2015 unless renewed by the State legislature).

Prior to the amendment, under section 193, an item could be deducted from an employee’s wages if the deduction is either authorized by law or government regulation (for example, tax withholdings or Medicare contributions), or is expressly permitted by Section 193. In turn, section 193 permits a deduction from an employee’s wages if the deduction (1) is expressly authorized in writing by the employee, (2) is for the employee’s benefit, (3) and is one of the following: a payment for insurance premiums, pension or health and welfare benefits, a contribution to a charitable organization, a payment for United States bonds, a payment for union dues, or a similar payment (up to 10% of gross wages per payroll period) for the benefit of the employee.

The amendment to section 193 makes the following changes.

Additional Requirements For Employee Authorization In (1). Any deduction must be expressly authorized in writing by the employee. The authorization must be voluntary, and must be given following receipt by the employee of written notice from the employer. This notice must include all terms and conditions of the deduction and/or its benefits, and the details of the manner in which deductions will be made. If there is a substantial change in the terms or conditions of the deduction, such as a change in the amount or benefit of the deduction, the employer must, as soon as practicable but before any increased (or changed) deduction is taken, notify the employee of the change. An employee’s authorization must be kept on file on the employer’s premises while the employee remains employed by the employer, and for six years after such employment ends.

More Items Covered In (3). The type of deduction included in (3) above has been expanded to include deductions for:

–all insurance premiums and prepaid legal plans;

–fitness or health club and/or gym membership dues;

–cafeteria, vending machine and pharmacy purchases made at an employer’s premises;

— purchases made at an event sponsored by a charitable organization affiliated with the employer, if at least twenty percent of the profits from such event are contributed to that or another charitable organization;

— discounted parking, or discounted passes, tokens, fare cards, vouchers, or other items that entitle the employee to use mass transit;

–purchases made at gift shops run by the employer, if the employer is a hospital, college or university;

–tuition, room, board and fees for pre- nursery, nursery, primary, secondary and post-secondary school;

–daycare expenses, before-and-after school expenses; and
–payments for housing provided at no more than market rates by non-profit hospitals or affiliates.

Recovery Of Wage Overpayments And Wage Advances. An employer may deduct an amount to recover (i) an overpayment of wages, when the overpayment was due to a mathematical or other clerical error by the employer or (ii) wage advances. Any such deduction must comply with regulations to be issued by the NYS Department of Labor.

Pre-Tax Deductions Permitted. The amendment permits deductions made under an employer-sponsored pre-tax contribution plan, approved by the IRS or other local taxing authority. Thus, deductions for 401(k) and cafeteria plans are expressly allowed (although they had always been allowed before the amendment).

Employer action required-if an employer will deduct any of the items allowed under (3)-as expanded-after November 5, 2012, the employer must prepare and provide employees with the notice described above.