New Wage Withholding Law
June 26, 2012
The legislature gave final approval last week to legislation, S.7790 (Young)/A.10785 (Rules/Morelle) available here, that will expand the ability for employees to authorize their employer to make paycheck deductions. It is expected to be signed by Governor Cuomo, and will be effective sixty (60) days after gubernatorial approval.
In addition to the categories of paycheck deductions currently authorized under Section 193 of the Labor Law, for insurance premiums, retirement/benefit plan contributions, contributions to charitable organizations, U.S. Savings bond purchases and union dues, employees would also be allowed to authorize deductions for:
- prepaid legal plans;
- purchases by employees made at events sponsored by charities where 20% or more of profits go to the charity;
- discounted parking and discounted passes & tokens/fare cards/vouchers for mass transit;
- fitness/health club/gym memberships;
- employer-provided on-site cafeteria and vending machine purchases;
- purchases by employees at gift shops operated by hospitals and colleges;
- purchases at on-premises employer pharmacies;
- tuition, room & board & fees for pre-school through college and day care expenses; and
- market-rate housing provided by a non-profit hospital or its affiliate.
Note that the bill does not authorize several other categories of withholdings that had been proposed by The Business Council, such as for employee PACs and specialized tools.
The bill also separately allows for deductions for withholdings related to the repayment of pay advances and the recovery of pay overages, both of which will be subject to (and must wait adoption of) new regulations prepared by the state Labor Department. These new regulations will cover the amount and pace of repayments, employee notice requirements, and will require employers to have a dispute resolution process enabling an employee to dispute or delay repayments.
Note that the current Section 193 also allows for “similar payments for the benefit of the employee.”
Along with the expanded allowable deductions, this bill adds new administrative requirements as well:
- It requires written authorization from employees prior to any withholdings under Labor Law Section 193, or authorization pursuant to the terms of a collective bargaining agreement.
- It requires employers to provide a written notice to employees regarding the terms & conditions of any paycheck deduction.
- It requires the employer to notify the employee in writing, prior to any increased deduction, or “substantial” changes in the terms and conditions of the deduction.
- It requires employers to retain the employee’s written paycheck deduction authorization for six years after the person’s employment ends.
- It allows employees to discontinue deductions at any time and requires the employer to comply with such directives “as soon as practicable,” but no later than four pay periods or eight weeks after receiving such notice.
- The bill requires an aggregate deduction limit to be established by the employer, and gives employees the opportunity to set their own lower limit, with these limits covering just three of the deduction categories: donations to charitable organizations, cafeteria and vending purchases, and pharmacy purchases, as well as other categories determined by the DOL commissioner to be “similar to” those specified in statute. The employer is charged with ensuring that deductions do not exceed these limits, and is also required to provide employees access to a written running total of their withholdings during each pay period.
The Administration has expressed its interest in working with The Business Council on implementation of these regulations.
As the process moves forward, please feel free to contact us on The Business Council’s HR Line at 800-332-2117 if you have any questions.