New York DOL Issues Proposed Wage Deduction Regulations

The New York Department of Labor (NYDOL) finally posted proposed wage deduction regulations on its website. While the amended wage deduction law took effect last November, employers have been unable to take advantage of their right to recoup inadvertent overpayments under the law without NYDOL’s implementing regulations covering notice and procedural requirements. With proposed regulations now published in the NYS Register, New York employers are one step closer to realizing new benefits under the law. The public comment period is open until July 6, 2013.

The proposed regulations would permit employers to make wage deductions for overpaid wages due to a mathematical or other clerical error as follows:

  • The employer must provide notice of its intent to make deductions either three days or three weeks before the deduction, depending on the amount to be deducted. Notice must include the amount overpaid in total and per pay period, the total amount to be deducted and the date and amount of each deduction.
  • Notice must be made within eight weeks of the overpayment, although the wage deductions may continue for up to six years from the original overpayment.
  • Employees must be given notice that the overpayment may be contested, including the deadline and procedure for challenging the employer’s determination.
  • If the overpayment is less than or equal to the net wages earned in the next pay period, the employer may recover the entire amount in that next wage payment. However, if the overpayment exceeds the net wages in the next pay period, the employer may only recover up to 12.5% of gross wages earned in that wage payment, and the deduction may not reduce the effective hourly rate below minimum wage.
  • Employers must adopt procedures for employees to dispute the overpayment, the terms of recovery and/or the timing of the recovery. For unionized employers, dispute resolution provisions in collective bargaining agreements which provide at least as much protection to the employee shall be deemed to be compliant with the law.

The proposed regulations also permit employers to make deductions for repayment of advances of wages or salary with similar notice and procedural requirements.

We will continue to monitor developments on the proposed wage deduction regulations. For more information about the regulations, the public comment period and our firm’s wage and hour compliance audit services, please contact John R. Vreeland, Esq., Director of the firm’s Wage & Hour Compliance Practice Group, jvreeland@nullgenovaburns.com, or Douglas J. Klein, Esq., dklein@nullgenovaburns.com.