Making paycheck deductions in New York is dangerous business

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in Compensation and Benefits,Employment Law,Human Resources

by John M. Bagyi and John Ho, Esqs.

When an employee owes the company money, it may be tempting to simply deduct it from his or her next paycheck. But in New York, that can be a big mistake.

Over the past couple of years, the New York State Department of Labor (NYSDOL) has issued several opinion letters that significantly narrow its interpretation of New York Labor Law Section 193, the law governing when and how employers may make deductions from employee wages.

The NYSDOL’s new opinion ­letters state the position that a deduction from wages is not permissible unless it is similar to instances expressly recognized as legal in the statute. That means the deductions must be akin to employee payments for health and welfare benefits, insurance premiums and retirement investments.

That interpretation is dramatically different from the NYSDOL’s his­tori­cal focus on whether the deduction was for the “benefit of the employee.”

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