Final Wage Deduction Rules Issued

Contact: Frank Kerbein

The final rules concerning deductions from employee’s wages were issued by the NYS Department of Labor last week and were effective October 9, 2013.

When the changes to Section 193 of the state’s labor law permitting new additional wage deductions became effective in November 2012, one major aspect was left unfinished-rules for the recovery by employers of paycheck overpayments and pay advances. These final rules have now set up the employer requirement s for these recoveries.

Employers will now be able to only recover paycheck overpayments that have occurred in the eight weeks prior to the date the employer notifies the employee in writing of its intension to recover the overpayments. The new rules specify what information the employer must include in the notice. The employer must also set up a procedure for the employee to dispute the overpayments and the repayment terms and give employee the opportunity for a meeting to discuss any issues raised  The employer must then provide the employee a written notice of the its final determination concerning the recovery of overpayments. If the total wage overpayment to the employee is less than the employee’s next net paycheck, the overpayment may be recovered from one paycheck. If the total wage overpayment to the employee is greater than the employee’s next net paycheck, the employer may only deduct a maximum of 12.5% of the gross paycheck from subsequent paychecks.

The recovery of advances of wages to employees is accomplished through a simpler method to overpayments involving a written agreement between the employer and employee of the repayment terms.  Like the overpayment recovery process, the employee is permitted to contest the deductions but only those conditions not in accordance with the written agreement.

This final wage deduction rule also discusses issues concerning the “ authorization of deductions” by the employee, what “for the benefit of the employee” means and provides a sample list of deductions specifically prohibited.

Last week’s final rule may be viewed here while The Business Council’s July comments to the original rule proposed in May can be viewed here.

The Business Council is working on a template for use by members that includes the required notice information as well as the steps for the employee dispute procedure.