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Summary of differences between federal and state regulations
Federal regulations restrict the types of deductions that can be made from an employee’s wages or salary. Deductions can be made in certain cases, but the legality often depends on the nature and purpose of the deductions, as well as the status of the employee as exempt or non-exempt.
New York law states that employers may make deductions that are permitted or authorized by law, or authorized in writing by the employee, and are for the employee’s benefit. Authorized deductions are limited to payments for insurance premiums, pension, health or welfare benefits, contributions to charities, payments for U.S. bonds, dues, assessments, and the like.
For more information, see www.labor.state.ny.us/formsdocs/wp/LS605.PDF.
The New York Department of Labor has found, based on court rulings, that permissible deductions are limited to items specifically listed in the law, and this does not include deductions to recover an over-payment of wages. Employers may request that an employee reimburse the company “out of pocket” for an over-payment, but may not require the employee to do so under threat of discipline or termination. Also, an employer cannot recover an over-payment through future payroll deductions, even if the employee agrees to authorize such deductions.
Employers may not deduct from wages the cost of breakage or spoilage of materials; nor may employers make wage deductions in any indirect manner, such as requiring a worker to pay for shortages by means of a separate transaction.
On November 7, 2012, employers gained more flexibility in making wage deductions. Revisions to the law allowed deductions for a number of additional reasons, although voluntary authorization from the employee is still required. Additional reasons include:
- purchases made at events sponsored by a charitable organization;
- discounted parking or passes, tokens, fare cards, vouchers, or other items for using mass transit;
- fitness center, health club, or gym membership dues
- cafeteria and vending machine purchases made at the place of business, or at gift shops operated by the employer (where the employer is a hospital, college, or university);
- pharmacy purchases made at the employer's place of business;
- tuition, room, board, and fees for pre-school, nursery, primary, secondary, or post-secondary educational institutions;
- day care, before school and after school care expenses.
In addition, employers may recover an overpayment of wages where the overpayment is due to a mathematical or other clerical error by the employer. Employers may also recover advances of salary or wages made to the employee. The Department of Labor will create regulations for these deductions.
An employer can not deduct the cost of a medical exam required by the employer from the employee’s wages.
State
Contact
New York State Department of Labor
Regulations
Chapter 31, Section 193 of the New York State Labor Law
Chapter 31, Section 201b of the New York State Labor Law
12 NYCRR Part 195, Deductions from Wages
www.labor.ny.gov/legal/laws/pdf/wage-deduction/12-NYCRR195-Wage-Deductions-Text.pdf
Federal
Contact
Regulations
For non-exempt employees:
29 CFR Part 531, Wage Payments under The Fair Labor Standards Act of 1938
For exempt employees:
29 CFR Part 541, Subpart G, Salary Requirements