Can My Employer Deduct Money From My Paycheck? New York City Wage and Hour Lawyer Explains

Can An Employer in New York Deduct Money from My Paycheck?  

One of the most common New York wage and hour questions is what can an employer deduct from my paycheck in New York?  While the federal Fair Labor Standards Act (FLSA) generally allows an employer to deduct money from an employer’s paycheck, New York law limits what an employer can deduct and sets specific parameters.  This can become complicated for both employers and employees, as there are many nuances that can create confusion and lead to improper results.  Read on to learn more about your rights and obligations, or call our experienced New York City wage and hour lawyer for a FREE consultation.

What Can an Employer NOT Deduct From my Paycheck?

Under New York statutory law (legislatively-made law), common law (judge-made law), and regulatory law (agency-made law), employers are not allowed to deduct money out of an employee’s paycheck for many things.  For example, employers cannot deduct money for:

  • Items broken by an employer while working, like merchandise that is dropped;
  • Cash shortages at a register, even if the employee was the only employer working the register;
  • Business “fines” or “penalties” for misconduct;
  • Company property that is lost (i.e., the employee loses a laptop);
  • Business losses, such as an employee’s conduct which loses a customer’s business;
  • Used vacation or sick time that is above the allotted amount (“negative vacation time”);
  • Travel expenses or lodging; and
  • Some overpayments.

If an employer has made any of these deductions automatically from your paycheck, you may have a wage and hour claim.

What Can an Employer Always Deduct From my Paycheck?

There are certain expenses that an employer can always deduct from your paycheck if your employer chooses to do so.  These are expressly provided under New York Labor Law section 193, which permits deductions for the following:

  • Federal taxes;
  • State taxes;
  • Insurance premiums;
  • Unions dues;
  • Pension payments; and
  • Employee-authorized deductions.

Employee-authorized deductions means those deductions that an employee has consented to an employer removing.  Some common employee-authorized deductions include removing retirement accounts (401k, deferred compensation), repayment of an employer loan, donations to charity, and approved deductions for overpayments.

What May an Employer Sometimes Deduct from my Paycheck?

Overpayments may sometimes be deducted from an employee’s paycheck.  This is a tricky process and there are many areas for mistakes which can result in liability for an employer.  Under New York Labor Law section 193, an employer may deduct the overpayment of wages which were due to a “mathematical or other clerical error by the employer.”

However, to do so an employer must comply with the New York rules and regulations.  Under 12 NYCRR section 195-5.1, an employer is limited in the time (may only recover an overpayment made within 8 weeks) and duration of payment (may only make deductions for six years from the date of the overpayment).

An employer is also limited in the amount it can seek in the overpayment.  If the overpayment is equal to or less than the regular paycheck, the employer may deduct all of the overpayment amount in that paycheck.  If the overpayment amount is more than a regular paycheck, the amount deducted may not exceed more than 12.5% of the gross wages in that wage payment.  Nor can the deduction reduce the employee’s wages below the minimum wage rate.

Before an employer can even perform any overpayment deduction, the employer must give a notice of intent to deduct to the employee.  This must provide the amount overpaid and when it is scheduled to be deducted.  The notice must also allow the employee to object or contest the overpayment.

If there are lapses in the way any of these procedures are performed, the overpayment—even if a true error by the employer—will be improper and against the labor law.

Still Unsure What Your Employer Can Deduct From Your Paycheck?  Call our New York City Wage and Hour Attorney to Learn More

The experienced New York City wage and hour attorneys at SAMUEL & STEIN are dedicated to asserting and defending the rights of employers and working people throughout New York and New Jersey.  We have the resources, experience, and knowledge necessary to ensure your legal rights are protected and you are not taken advantage of.  Call us today by dialing (646) 480-2149 or use the convenient “Evaluate Now” box on our webpage.  Together we can help answer your questions and protect your rights.

Share this Article

About the Author

Free Initial Consultation Get Help Now