New York employers face stricter limits on deductions from employee paychecks, under new regulations issued by the New York Department of Labor. The new regulations clarify severe restrictions under Labor Law Section 193 that limit deductions, even with the employee’s written permission.
Specifically, the new regulations prohibit deductions in four areas that have been common in the past.
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Employers are not allowed to make deductions for overpayments or salary advances. This also means that the New York employer cannot dock an employee’s final paycheck if the employee has a negative vacation balance.
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Employers in New York cannot make deductions for repayment of a loan, advance or debt. There is an exception when an employee’s wages are garnished under a court order. However, the employer cannot make deductions to recover amounts loaned to the employee by the employer.
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The new regulations specifically prohibit deducting cash register shortages from an employee’s paycheck, even when the employee was the only person with access to the cash drawer. They also prohibit employers from making deductions for spoilage or breakage.
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An employer is not allowed to make deductions for employment-related expenses, such as training, seminars, travel or other benefits provided by the employer. In the past, many companies had policies in place that an employee had to repay such expenses if he or she did not work for the company a specific period of time after the training, often one year. This deduction is now illegal in New York.
The regulations still permit the employer to make deductions for state and federal taxes as required by law.
In addition, a New York employer can make the following deductions with the employee’s written permission:
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Insurance premiums
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Pension payments
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Donations to charity
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Purchase of U.S. Savings Bonds
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Union dues
Like many states, New York allows deductions “for the benefit of the employee” but the new regulations severely limit the scope of those deductions. This new interpretation of the law means that New York has one of the most severe restrictions on deductions of any state, with the possible exception of California.
