New York State DOL Continues Attack on Deductions from Wages

June 9, 2011

Over the last couple of years the New York State Department of Labor has issued several opinion letters which significantly narrow its interpretation of New York Labor Law Section 193, the law governing permissible deductions from wages. We have discussed some of these interpretations in prior posts. To summarize, NYSDOL  takes the position that a deduction from wages is not permissible unless it is a deduction which is similar to those expressly recognized in the statute as lawful, e.g. payments for insurance premiums, pension or health and welfare benefits. This interpretation varies from the Department’s historical focus on whether the deduction was for the “benefit of the employee.” Based on the newer standard, NYSDOL has rejected suggestions that an employer may make deductions from wages for items such as an overpayment of wages, parking, or for wage-linked card purchases of food at an employer-subsidized cafeteria.

The attack on deductions which are not similar to deductions for traditional employee benefits continued earlier this year when NYSDOL issued an opinion letter finding that deductions for overpayment of wages from a “paid time off” bank would also violate Section 193. In reaching this conclusion, the Department determined that paid leave time constitutes “wages,” so deducting from that time would be a deduction from wages covered by Section 193. Significantly, this interpretation runs counter to the long-time general rule in New York that an employer is required only to abide by the terms of its paid leave policy, because it is not required to provide paid time off at all. For example, “use it or lose it” polices are permissible in New York as long as the policy is clear and unambiguous. Under that rule, a paid time off policy which clearly states that accrued paid time off may be reduced by the amount of overpaid wages should also be permissible. NYSDOL’s most recent opinion letter on the subject serves as a reminder to employers that unless the deduction from wages is one that is actually listed in Section 193, the NYSDOL will probably view it as impermissible.