Relates to permitted deductions from wages

BILL NUMBER:S5623

Title of bill

An act to amend chapter 451 of the laws of 2012, amending the labor law relating to permitted deductions from wages, in relation to extending the expiration and repeal date thereof for an additional three years

Purpose

This bill would extend the authorization for employers to make authorized deductions from wages from their employees.

Summary of provisions

Section 1 of this bill amends chapter 451 of the laws of 2012 to extend the categories of permissible wage deductions that an employer may take from their employees upon receiving written consent for 6 years after the enactment of chapter 451 of the laws of 2012.

Section 2 of this bill provides that this act shall take effect immediately.

Justifications

The Labor Law currently allows employers to make deductions from employees' wages under two specifically referenced circumstances; when the deductions are either allowed under law (e.g., tax withholdings) or when they fall within specific categories of commonly recognized deductions for which employee consent has been given (e.g., insurance premiums, retirement contributions, charitable contributions). Wage deductions are not permitted for the purchase of goods and services provided by employers for the convenience of the employee on items such as gym memberships, purchases at cafeterias, vending machines, and employer operated pharmacies. This is disadvantageous to both employers and employees.

This bill would change these restrictions and would allow employers, with the employees consent, to deduct wages from an employee's paycheck to cover specified goods and services including, payments for swipe card systems for an employee's convenience to cover items such as purchases at cafeterias, vending machines, and pharmacies. The bill would also allow employers to make arrangements with service providers, including, health clubs, day care centers, and parking vendors for the benefit of employees who wish to utilize such services and pay through a wage deduction system.

Allowing for the use of wage deductions for service payments is not only convenient, but provides the employee with an opportunity to make periodic payments without the interest charges that would accumulate if credit cards or loans were used for the same purpose. At the same time, protections contained in the bill would ensure that employees are fully informed of the terms associated with all voluntary deductions, that such deductions are truly voluntary, that authorization for a deduction may be withdrawn at any time, and that employees may set limits on their wage deduction spending amounts.

Finally, despite diligent efforts made by employers, payroll agents, and others, inadvertent overpayment of wages due to mathematical or other clerical error occurs with some frequency. The proposed bill would allow recapture of overpayments pursuant regulations to be promulgated by the Commissioner. Similarly, the bill would provide a regulatory framework in which employers may give employees advances on wages, a benefit provided to employees to allow them to weather financial setbacks or address unexpected expenses. Under both circumstances, the regulations will take into account factors such as the size of payments that may be deducted; the timing, frequency, duration, and method of such deductions; and requirements for notice to the employee and the opportunity for disputing or delaying deductions that will be taken.

Legislative history

Chapter 451 of the Laws of 2012 (A.10785/S.7790).

Fiscal implications

None.

Effective date

This act shall take effect immediately.