NYSDOL REVEALS DRAFT RULES ON EMPLOYEE WAGE DEDUCTIONS

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1 NYSDOL REVEALS DRAFT RULES ON EMPLOYEE WAGE DEDUCTIONS LeadingAge New York Financial Managers Conference September 12, 2013 John M. Bagyi, Esq., SPHR Bond, Schoeneck & King, PLLC Attorneys At Law Since Washington Avenue Albany, NY Telephone: (518)

2 John M. Bagyi John counsels and represents employers of all types and sizes in a variety of labor and employment-related contexts, including workplace investigations, policy development and review, wage and hour and EEO compliance, union organizing campaigns, strikes and picketing, proceedings before the National Labor Relations Board, the Division of Human Rights and the EEOC, and employment litigation in Federal and State courts. He also provides a broad range of employment law and human resource training to executives, managers, supervisors, and employees. John has written extensively on labor and employment law topics and is also a frequent speaker at national, state and local conferences, including the 2008 National SHRM Conference. He has also served as a guest lecturer at Albany Law School, RPI, and the School of Business at the University at Albany. Since 2005, John has served as General Counsel to the New York State Society for Human Resource Management. Listed In Super Lawyers, Corporate Counsel Edition, present New York Super Lawyers, Upstate Edition, present The Best Lawyers in America 2007-present Honors and Awards Lawyer of the Year Albany Employment Law Management, The Best Lawyers in America 2014 "Lawyer of the Year" Albany Labor Law - Management, The Best Lawyers in America 2014 Who s Who in America Who s Who in Emerging Leaders Excellence in Alumni Service Award, Albany Law School, Under Forty Honoree, Capital District Business Review, 2004 Associate Member of the Year, New York State Association of Health Care Providers, 2003 Justinian Honor Society Executive Editor, Albany Law Review Community Involvement Founder and Facilitator, CRHRA HR Leadership Program, present General Counsel, New York State Society for Human Resource Management, 2005-present Founder and Facilitator, CRHRA/BS&K HR Executive Briefing Series, 2004-present Executive Committee, National Alumni Association, Albany Law School, Co-Chair, Capital Leadership Steering Committee, Albany-Colonie Chamber of Commerce, Board of Directors, Capital Region Human Resources Association, Contact 111 Washington Avenue Albany NY jbagyi@bsk.com Direct Fax Education Albany Law School of Union University (J.D., magna cum laude, 1996) University at Albany, State University of New York (B.A., 1993) Bar Admissions New York Massachusetts U.S. Supreme Court Northern District of New York Affiliations Albany Co. Bar Association American Bar Association American Society for Healthcare Human Resources Administration (ASHHRA) College and University Personnel Association (CUPA-HR) National Association of College and University Attorneys (NACUA) New York State Bar Association LinkedIn linkedin.com/in/johnbagyi Facebook facebook.com/john.bagyi

3 Deductions from Wages (Pre-2012 Amendment) New York Labor Law Section 193 generally prohibited deductions from employee wages except: o those made in accordance with law (taxes, Social Security, etc.); or o those authorized by the employee, in writing, which are for the benefit of the employee and fall under an enumerated list of payments. 1 Deductions from Wages (Pre-2012 Amendment) Formerly limited to: o Payments for insurance premiums; o Pension or health and welfare benefits; o Contributions to charitable organizations; o Payments for United States bonds; o Payments for dues or assessments to a labor organization; and o Similar payments*. * Note: The amount of similar payment deductions which may be made for the benefit of the employee is capped at no more than, in the aggregate, 10% of the employee s gross wages for the pay period Bond, Schoeneck & King, PLLC

4 2012 Amendment to Section 193 Effective November 6, 2012 Expands list of permissible deductions Imposes other deduction-related requirements Permits deductions for advances and for overpayments due to a mathematical or other clerical error by the employer o Subject to forthcoming NYSDOL rules 3 Draft NYSDOL Rules Filed on May 7, 2013; formally published on May 22, 2013 o Available at: Open for public comment until July 6, 2013 Would repeal existing 12 NYCRR 195 and adopt a new 12 NYCRR Bond, Schoeneck & King, PLLC

5 5 Draft NYSDOL Rules Key Provisions* o Employee Authorization o Interpretation of Similar Payments For the Benefit of the Employee o Prohibited Deductions o Requirements for Permissible Advance and Overpayment Deductions o Other Authorization & Notification Requirements *There are more provisions! Employee Authorization By collective bargaining agreement or agreement between employer and employee that is express, written, voluntary and informed Informed = Employee given written notice of: o All terms and conditions of deduction; o Benefit(s) of deduction; and o Details in which deductions made Bond, Schoeneck & King, PLLC

6 Employee Authorization (Cont.) Written notice must precede execution of authorization, as well as any change in amount of deduction or substantial change in benefits o Increase in deduction amount = substantial change o Can use high/low range for fluctuating deductions Employees/Representatives must be granted access to materials o Employers not required to pay or provide means for review Amendment to Section 193 Good News: Amended statute still permits deductions for similar payments for the benefit of the employee Bad News: NYSDOL is still narrowly construing this catch-all provision Bond, Schoeneck & King, PLLC

7 Permissible Similar Payments Must fall within one of the enumerated permissible categories (non-exclusive examples included) o Health & Welfare Benefits o Pension & Savings Benefits o Charitable Benefits o Representational Benefits o Transportation Benefits o Food & Lodging Benefits 9 For the Benefit of the Employee Means: Financial or other support for employee, employee s family, or charitable organization o Limited to: Health and welfare benefits, pensions and retirement benefits, child care and educational benefits, charitable benefits, dues and assessments, transportation, and food and lodging Convenience is not a recognized benefit o E.g., No deductions for check-cashing fees (cont d) Bond, Schoeneck & King, PLLC

8 For the Benefit of the Employee Okay if deduction provides generalized indirect benefit to employer If financial gain to employer at employee s expense calls benefit into question Employer may deduct for discounted sale of own goods and services as otherwise permitted by Section 193 and rules 11 Prohibited Deductions Repayment of loans, advances, and overpayments not in accordance with rules Purchases of tools, equipment and attire required for work Recoupment of unauthorized expenses Repayment of employer loses (spoilage, breakage, cash shortages, etc.) Contributions to PACs, campaigns and similar payments Fees, interest or employer s administrative costs Bond, Schoeneck & King, PLLC

9 Deductions for Advances Advance = Provision of money based on anticipation of earning future wages o No interest, fee(s), or other amounts can be included Prior agreement as to timing and duration of repayment required No further advances given or deducted until initial advance repaid in full Deductions no less frequently than each wage payment Amount recovered through deduction determined by written terms of advanced authorization (cont d) 13 Deductions for Advances Employers must implement dispute procedure and provide advanced notice of procedure to employees o Employee must be able to provide written notice of objection o Employer must reply as soon as practicable Employer must cease deductions until reply given and any adjustments made Failure to afford dispute procedures creates presumption that deduction was illegal Separate payments must also follow rules Bond, Schoeneck & King, PLLC

10 Deductions for Overpayments 15 May only recover overpayments made within 8 weeks of Notice of Intent to employee 6-year max. repayment term 3-day or 3-week advance notice required, depending on amount of deduction No more frequently than once per wage payment Limitations on amount of deduction, depending on size of overpayment Repayment by separate transaction permissible, but must comply with rules (cont d) Deductions for Overpayments Notice of Intent must contain: o Amount overpaid, total and per pay period o Total amount to be deducted o Date and amount of each deduction o Right to contest overpayment, along with deadline for contest and corresponding dispute procedure (or reference where procedure can be located) (cont d) Bond, Schoeneck & King, PLLC

11 Deductions for Overpayments Employers must implement dispute procedure for employees to challenge overpayment and/or terms of recovery o Rules specify substance and timing of employee response, employer reply, joint conference, and final determination o Dispute resolution mechanisms in collective bargaining agreements may (or may not) suffice (cont d) 17 Deductions for Overpayments Employers must wait at least 3 weeks after issuing final determination to make deductions Failure to afford dispute procedures creates presumption that deduction was illegal Bond, Schoeneck & King, PLLC

12 Other Authorization and Notification Requirements May be given in writing or through or other electronic means Statements given to employees must use ordinary language readily understood No smaller than 12-point font Must keep record of authorizations for at least 6 years after employee s separation 19 Take-Aways Evaluate deduction practices for compliance with amended Section 193 Monitor draft NYSDOL rules for further developments (final rules may differ) Start considering policies, employee notifications, and dispute procedures for permissible advance and overpayment deductions o Must comply with any forthcoming final NYSDOL rules Bond, Schoeneck & King, PLLC

13 facebook.com/john.bagyi All rights reserved. This presentation may not be reprinted or duplicated in any form, without the express written authorization of John M. Bagyi, Esq., SPHR Bond, Schoeneck & King, PLLC