PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following proposed rule:
Proposed Action:
Repeal of Part 195; and addition of new Part 195 to Title 12 NYCRR.
Statutory authority:
Labor Law, section 193
Subject:
Deductions from Wages.
Purpose:
To explain the types of deduction that are authorized to be made from wages and the method by which those deductions may be made.
Substance of proposed rule (Full text is posted at the following State website: www.labor.ny.gov):
195-1.1 provides that the purpose of the part is to establish provisions governing authorized deductions for the benefit of employees, for the recovery of overpayments due to clerical or mathematical errors, and for repayment of advances.
195-1.2 Provides to whom the regulation applies and that the regulation requires continued compliance with other laws relating to company stores and wage deductions.
195-2.1 Provides that wage deductions are prohibited unless they are (1) deductions made in accordance with any law, rule or regulation issued by any governmental agency; (2) deductions specified by, or similar to those specified by, section 193 of the Labor Law, authorized by, and for the benefit of, the employee; (3) deductions for the recovery of overpayments made in accordance with the proposed regulation; and (4) deductions for the repayment of wage advances made in accordance with the proposed regulation.
195-2.2 Provides that no employer engaged in performing a public work shall operate a company store if there is a store within two miles of the work site and provides that no deduction shall be made for groceries, provisions, board, lodging or clothing.
195-3.1 Provides that deductions from wages may be made in accordance with a government’s law, rule or regulation.
195-4.1 Provides that deductions for the benefit of the employee are authorized if they are listed in Labor Law § 193(b)(1) or are a “similar deduction for the benefit of the employee.”
195-4.2 Provides when an employer must seek authorization for a deduction for the benefit of an employee, and provides that such a deduction is authorized if agreed to in a collective bargaining agreement or a written authorization signed by the employee prior to the deduction being made and provides for notice of the deduction to the employee.
195-4.3 Provides that deductions for the benefit of the employee are those listed in Labor Law § 193(b)(1) or those that are: health and welfare benefits; pensions and retirement benefits; child care and educational benefits; charitable benefits; dues and assessments; transportation; and food and lodging. Also provides for deductions that may be made when the employer receives a financial gain and deductions that are prohibited.
195-4.4 Categorizes the deductions that may be made for payments listed in Labor Law § 193(b)(1).
195-4.5 Lists some payments that are not similar and for the benefit of the employee.
195-5.1 Provides the following for deductions for overpayments where such overpayment is due to a mathematical or other clerical error made by the employer: (1) the timing and duration of the deduction; (2) the frequency of the deduction; (3) method of recovery of the overpayment; (4) limitations on the periodic amount of recovery for the overpayment; (5) the timing and contents of a notice of intent to make the deduction; and (6) the procedure that an employee may take if he or she chooses to contest the deduction.
195-5.2 Provides for deductions from an employee’s wages for repayment of advances of salary or wages made by the employer. This section provides for: (1) timing and duration of the deduction; (2) the frequency of the deduction; (3) the method of recovery of the advance; (4) limitations on the periodic amount of recovery; (5) authorization for the deduction; and (6) implementation of and a procedure for an employee to contest the deduction.
195-5.3 Provides for the format and method of transmission of authorizations and notifications.
Text of proposed rule and any required statements and analyses may be obtained from:
Amy C. Karp, Legislative Counsel, New York State Department of Labor, State Office Campus, Building 12, Room 509, Albany, NY 12240, (518) 457-7350, email: Regulations@labor.ny.gov
Data, views or arguments may be submitted to:
Same as above.
Public comment will be received until:
45 days after publication of this notice.
Regulatory Impact Statement
Statutory Authority: Labor Law § § 21(11), 193 and 199.
Legislative Objectives: The purpose of the authorizing legislation is to allow additional specifically stated deductions for the benefit of an employee; permit the recovery of overpayments due to clerical or mathematical errors; permit the repayment of advances; and to provide for a method for making these deductions.
Needs and Benefits: New Part 195 will improve regulatory conditions in the state by providing clarification of the requirements for making deductions from wages. The new Part 195 will provide benefits to the regulated community as it will ensure the protection of workers and provide guidance to employers who wish to make deductions from wages. This regulation will inform and serve the public and regulated community, and supplement the Department's ability to monitor and enforce certain deductions.
Costs: The Department estimates the cost to comply with this rule is minimal. There would be a minimal cost to employers to develop and store authorizations, notices and other paperwork that would be required if an employer chooses to make deductions from wages for the benefit of the employee. There would be a minimal cost to employers to provide notices and to develop and execute a procedure for an employee to contest or delay a deduction for an overpayment made to the employee due to mathematical or clerical error or an advance made to the employee, if an employer chooses to deduct an overpayment or advance from wages. The Department estimates that there will be no increased costs to the State to administer the rule.
Local Government Mandate: Labor Law § 193 does not apply to governments or municipalities.
Paperwork: The statute requires that an employer provide notice of the terms and conditions of the deduction and that an employee sign an authorization prior to an employer making a deduction from wages for the benefit of an employee. The statute also requires that an employer provide notice of the procedure for disputing a deduction for an overpayment made to an employee due to clerical or mathematical error or an advance or delaying a deduction for an overpayment or advance and to execute this procedure when necessary. The regulations provide guidance regarding these statutory requirements.
Duplication: This rule does not duplicate, overlap or conflict with any other State or federal requirements.
Alternatives: It has been concluded that regulations relating to the types of deductions that may be made, the method by which an employee should be provided with notice, the nature of employee authorization, and the type of procedures by which an employee may contest certain wage deductions are appropriate to provide employers with guidance and to assist in the equal application of the law.
Federal Standards: Federal regulations regarding wage deductions provide that no deduction shall be made that would reduce an employee’s wage to a wage below the minimum wage.
Compliance Schedule: The regulated community will be required to comply with this regulation when it becomes effective. This regulation shall become effective upon publication of its adoption in the State Register.
Regulatory Flexibility Analysis
Effect of Rule: This rule explains the types of deductions that are authorized to be made from wages and the method by which those deductions may be made. The rule applies to all employers, and clarifies the expanded circumstances in which deductions can be made. The rule will not affect small businesses unless they choose to make deductions from an employee’s wages and will not affect local governments at all.
Compliance Requirements: Employers that choose to make deductions from wages for the benefit of the employee pursuant to Labor Law § 193(b) would be required to obtain employee written authorizations and provide notice of the deductions. Those employers that choose to make deductions pursuant to Labor Law § 193(c) and (d) for overpayments due to clerical and mathematical errors made to an employee would be required to provide written notice of deductions and notice of procedures for an employee to contest these deductions made for overpayments in addition to providing a procedure for an employee to contest the deductions themselves, and/or the terms of repayment. Employers and employees must enter into an agreement for advances deducted from wages and employers must provide a procedure to contest such deductions. Employers who make deductions from wages for the benefit of the employee must maintain records of those deductions for a period of six years, regardless of whether the employer/employee relationship continues, similar to all other payroll record retention requirements.
Professional Services: No professional services would be required to effectuate the purposes of this rule.
Compliance Costs: While there may be costs associated with the compliance of this rule, if an employer chooses to make deductions from wages pursuant to Labor Law § 193(b),(c) and (d) and this rule, these costs should be minimal.
Economic and Technological Feasibility: The regulation does not require any use of technology to comply. Although there may be minimal additional costs associated with the new rule, if an employer chooses to make deductions from wages pursuant to Labor Law § 193(b),(c) and (d) and this rule, compliance is economically feasible. § 193 and these regulations do not apply to municipalities or governments.
Minimizing Adverse Impact: If a small business chooses to make deductions from wages for the benefit of an employee, for overpayments due to mathematical and clerical errors or for advances, the paperwork and requirements regarding authorization, notice and procedures for an employee to contest deductions are minimal. Therefore, the Department does not anticipate that the regulations will adversely impact small employers who comply with this Part. Different requirements for small businesses are not necessary.
Small Business and Local Government Participation: The Department has ensured that small businesses and local governments will have an opportunity to participate in the rule-making process. The Department has also participated in discussions with representatives of affected entities. The Department will elicit input from small businesses during the public comment period.
Rural Area Flexibility Analysis
1. Types and estimated numbers of rural areas: The requirements contained in the proposed new rule apply to any employer who chooses to make a deduction from wages for (1) the benefit of an employee, (2) overpayments made to an employee due to a mathematical or clerical error, or (3) advances made to an employee. These employers may include those located in the 44 rural counties with less than 200,000 inhabitants and the 71 towns in urban counties with a population density of 150 per square mile or less.
2. Reporting, recordkeeping and other compliance requirements: Employers that choose to make deductions from wages for the benefit of the employee pursuant to Labor Law § 193(b) would be required “to obtain written employee authorizations” and provide employees with notices of the deductions. Those employers that choose to make deductions pursuant to Labor Law § 193(c) and (d) for overpayments due to clerical and mathematical errors or advances made to an employee would be required to provide written notice of deductions and procedures for an employee to contest these deductions, and must also utilize a procedure if an employee chooses to contest these deductions. Employers who make deductions from wages for the benefit of the employee must maintain records during the time the employee from whom the deduction was taken is employed by the employer and for six years after that employee’s employment with the employer ends, as they do for other payroll records.
3. Professional services: No professional services will be required to comply with this rule.
4. Costs: The Department estimates the cost to comply with this rule is minimal. There could be a minimal cost to employers to develop and store authorizations, notices and other paperwork required if an employer chooses to make deductions from wages for the benefit of the employee. There would be a minimal cost to employers to provide notice and to develop and execute a procedure for an employee to contest or delay a deduction for an overpayment made to the employee due to mathematical or clerical error or an advance made to the employee, if an employer chooses to make a deduction to recoup an overpayment or advance from wages.
5. Minimizing adverse impact: The requirements of this rule are not mandatory, and if an employer chooses to make deductions from wages for the benefit of an employee, for overpayments due to mathematical and clerical errors or for advances, the paperwork and requirements regarding notice to the employee and procedures for an employee to contest deductions are minimal. Therefore, the Department does not anticipate that the regulations will adversely impact employers who comply with this Part. Different requirements for rural areas were not necessary.
6. Rural area participation: The Department has ensured that employers from rural areas have had an opportunity to participate in the rule-making process. The Department will elicit input from employers and employees in rural areas during the public comment period.
Job Impact Statement
The Department of Labor projects there will be no adverse impact on jobs or employment opportunities in the State of New York as a result of this proposed rule change. The rule provides guidance for deductions from wages as authorized in Labor Law 193. The nature and purpose of the rule is such that it will not have a substantial adverse impact on jobs or employment opportunities and therefore no Job Impact Analysis is required.
