NYS Wage Deduction Law

About New York’s Wage Deduction Law

The New York State Department of Labor has issued its final rules authorizing employers to make wage deductions to recover for accidental overpayment of wages and advances on wages to its workers. The new rules became effective October 9, 2013.

In order to make a lawful wage deduction for an overpayment:

1. The employer must provide the employee with notice of the intent to commence the deductions to recover the overpayment three days (if recouping the entire overpayment), or three weeks (for all other amounts) before the deduction(s) begin;
2. The employer can only recover overpayments made in the eight week period prior to the issuance of this notice, but may make deductions for a period of six years from the original overpayment;
3. The employer can only make one deduction per pay period;
4. If the entire overpayment is less than or equal to the net wages earned, the employer may recover the entire amount in one wage payment. If the overpayment exceeds the net wages, the recovery may not exceed 12.5% of the gross wages earned in the wage payment, and the deduction cannot reduce the employee’s hourly wage below the minimum wage;
5. Finally, employers must implement a procedure which allows the employee to dispute the overpayment and terms of recovery.

In order to make a lawful wage deduction for an advance on wages:

1. The employer and employee must agree in advance (and in writing) to the timing and duration of the repayment deductions;
2. The employer may only make one advance at a time (until the advance is repaid in full);
3. The employer can only make one deduction per pay period;
4. Employers must implement a procedure which allows the employee to dispute the amount and frequency of deductions.

As a result, employers seeking to make lawful wage deductions for overpayments or advances to its employees must ensure strict compliance with these regulations. Conversely, employees should also be aware of their rights and obligations under the law should their employer seek to make deductions from their wages.