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New York Expands Permissible Deductions

On September 7, 2012, Governor Andrew Cuomo of New York signed Assembly Bill Number A10785, amending Section 193 of the New York Labor Law to allow employers to make deductions from employee wages in a expanded number of circumstances. The “act shall take effect on the sixtieth day after it shall have become a law and shall expire and be deemed repealed 3 years after such effective date.” Consequently A10785 will become effective on November 6, 2012 and will expire on November 6, 2015 unless further action is taken.

Previously New York law provided a narrow list of deductions that an employer was allowed to take with the express written permission of the employees. These included insurance premiums, United States bonds, pension, and health and welfare benefits. The new amendments allow employers to make deductions for the following:

  • To recover for pay advance.
  • Accidental overpayment of wages.
  • Deductions for purchases made at certain events sponsored by bona fide charitable organizations.
  • Discounted parking passes and mass transit vouchers.
  • Gym membership dues.
  • Prepaid legal plans.
  • Cafeteria, vending machine and pharmacy purchases made at the employer’s place of business.
  • Tuition, room and board and fees for educational institutions.
  • Day care expenses.
  • Payments for housing provided at no more than market rates by nonprofit hospitals.

The amendments also state that collective bargaining agreements can serve as employee authorization for wage deductions.

However, it is important to note that all such deductions require the employee’s voluntary authorization which can be revoked at any time. In addition, prior to such an authorization, the employer must provide the employee with a written notice describing the benefits to be received in lieu of the deducted amount and the manner in which the deduction will be made. Should a change occur to the amount of the deduction, the benefit to be received or the manner of the deduction, the employer “as soon as practicable but in each case before any increased deduction is made on the employee’s behalf, notify the employee prior to the implementation of the change.” Finally, employers must maintain copies of such authorizations for at least six years after termination of employment.

Regulations are expected to define and limit employers’ ability to recover pay advances. In addition, purchases made at the employer’s place of business must be monitored and subject to aggregate deduction limits established by the employee and/or employer.

For a copy of A10785, please click on the link provided below:


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