Labor & HR Committee Update
September 12, 2012
Staff Contact: Frank Kerbein
Additional Paycheck Deductions Approved
Governor Cuomo gave final approval and on Friday, September 7, 2012 signed legislation, S.7790 /A.10785, which will expand the ability for employees to authorize their employers to make paycheck deductions. It is effective in sixty days.
In addition to the categories of paycheck deductions currently authorized under Section 193 of the state’s 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;
- market-rate housing provided by a non-profit hospital or its affiliate.
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.
Along with the expanded allowable deductions, this bill adds new employer administrative requirements as well:
- It continues to require 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 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. 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.
On a positive note, the Administration has expressed interest in working with The Business Council and its members on implementation regulations for pay overages and advances.