Governor Cuomo signed into law amendments to Article 193 of the New York Wage Deduction Law which will permit employers to take additional lawful deductions from employees’ paychecks. The law will take effect on November 8, 2012. As highlighted in our previous alert on July 6, 2012, available here, the changes will permit employers to recover certain wage overpayments from employees due to a clerical or mathematical error and for repayment of salary or wage advancement with advance employee written authorization and in accordance with other labor department regulations which govern issues such as amount permitted, frequency, and dispute procedure. The changes to the law will also allow employees to authorize and employers to make wage deductions for employee benefits such as parking, day care, gym memberships and cafeteria purchases. For unionized employees, these types of deductions can now be authorized through a collective bargaining agreement.

The amendments come as a welcome relief to employers after several years of a significantly narrowed scope of Article 193 by the courts and labor department. However, employers should proceed with caution. Employers are reminded that prior written authorization from the employee must be secured before making any wage deductions and the authorization must clearly explain the nature of the deduction and other critical details. Employers are advised to keep these authorizations on file for six years. Unless required by law or the terms of a collective bargaining agreement, employees have the right to rescind their authorization at any time and employers must cease such deductions no later than the earlier of eight weeks or four pay periods after consent has been withdrawn.

Employers making changes to their existing policy must ensure compliance with amended and other labor department regulations. There is some language in the amendments which is largely undefined that is subject to interpretation by the labor department and courts. For example, there is no guidance as to what will be considered to be a reasonable amount for employee purchases. Further, there is no explanation as to what is deemed a substantial change in the benefits of the deduction that requires employee notification. Nevertheless, employers should revisit their wage deduction practices to see what appropriate changes can be made and stay apprised of further legal developments.

If you have questions about how this may impact your business, please contact:

• Caroline J. Berdzik (609.986.1314; cberdzik@goldbergsegalla.com)
• Sean P. Beiter (716.566.5409; sbeiter@goldbergsegalla.com)
• Or another member of Goldberg Segalla’s Labor and Employment Practice Group