Employers with New York State operations must ensure they understand the New York State Department of Labor’s current position as to new hire notices and wage deductions.
New Hire Notices
As previously reported here, since October 26, 2009, New York state employers have been obligated to notify all new hires in writing of their hourly rate, overtime rate (if applicable) and payday, and receive a written acknowledgment of such notification. The Department has issued model forms for various types of pay structures, all of which can be found on the Department’s website, but continues to advise employers that use of the model forms is not mandatory. One of the Department’s model forms is directed to new hires the employer intends to treat as exempt employees, and both the form and its accompanying instructions require employers to list the exemption applicable to such employees. However, this form and its accompanying instructions were not fully consistent with the general guidelines for compliance, also posted by the Department on its website. Such guidelines simply stated that the exemption “should” be listed; it did not make doing so mandatory.
Recently, the Department modified its general guidelines and now consistently advises that the exemption must be listed for exempt employees on the new hire notice. In order to comply with the Department’s position, employers must ensure they carefully analyze the appropriate exemption(s) prior to listing them on any notice to ensure such statement is accurate. It is important to note however that this new directive goes beyond the statutory requirement contained in Section 195 of the Labor Law, although the statute does provide the Department with the right to issue "requirements as to content and form."
In addition to permitting deductions "in accordance with the provisions of any law or any rule or regulation issued by any governmental agency", Section 193 of the Labor Law permits deductions "for the benefit of employee" as long as such deductions are authorized in writing. Over the years, the Department, through opinion letters, has advised that this language permits deductions for various issues (such as wage overpayments and repayment of loans) as long as the employer obtained written consent and limited such deduction to 10% of gross wages for the payroll period.
However, since 2006, based on New York State Court of Appeals’ decision in Angello v. Labor Ready, the Department has consistently narrowed its interpretation of the phrase “for the benefit of the employee.” For example, in a 2007 opinion letter, the Department stated that in order for a deduction “for the benefit of the employee” to be permissible it must be a deduction which benefits the employee which is also similar to those enumerated in the statute (i.e., insurance premiums, pension or health and welfare benefits, contributions to charitable organizations, payments for United States bonds, payments for dues or assessments to a labor organization). Thereafter, through opinion letters, the Department modified its prior position as to the legality of certain wage deductions, such as a deduction from a final paycheck to cover used but unaccrued paid time off, and deductions for loan repayments and wage overpayments. The Department now states that such deductions are impermissible regardless of the employee’s written consent. Based on the Department’s consistently evolving, highly-protectionist pro-employee position, employers should carefully review their wage deduction practices in New York State.
Every business with New York operations should review these wage and hour compliance issues with counsel to ensure compliance.