N.Y. Comp. Codes R. & Regs. tit. 12 § 195-5.1

Current through Register Vol. 46, No. 17, April 24, 2024

Section 195-5.1 - Deductions for overpayments

Section 193, subdivision 1(c), of the New York State Labor Law permits an employer to make deductions from an employee's wages for "an overpayment of wages where such overpayment is due to a mathematical or other clerical error by the employer." Such deductions are only permitted as follows:

(a) Timing and duration. The employer may only recover such overpayments as were made in the eight weeks prior to the issuance of the notice described in subdivision (e) of this section. The employer may make deductions to recover overpayments for a period of six years from the original overpayment.

(b) Frequency. The employer shall recover overpayments by wage deduction no more frequently than once per wage payment, provided that such deduction complies with this Part.

(c) Method of recovery. Overpayments may be recovered through wage deduction or by separate transaction, as long as the procedures of subdivisions (a) and (d) through (i) of this section are followed. For purposes of this section, payments referenced as wage deductions shall include separate transactions.

(d) Limitations on the periodic amount of recovery. An employer may recover overpayments by deducting the amount of the overpayment from the employee's wages if the deduction complies with any final determination made in accordance with the procedures required pursuant to subdivision (g) of this section, and as follows:

(1) In such cases where the entire overpayment is less than or equal to the net wages earned after other permissible deductions in the next wage payment, the employer may recover the entire amount of such overpayment in that next wage payment.

(2) Where the recovery of an overpayment exceeds the net wages after other permissible deductions in the immediately subsequent wage payment, the recovery may not exceed 12.5 percent of the gross wages earned in that wage payment nor shall such deduction reduce the effective hourly wage below the statutory State minimum hourly wage.

(e) Notice of intent. The employer shall provide the employee with notice of the intent to commence the deductions to recover the overpayment. In such cases where the entire amount of the overpayment may be reclaimed in the next wage payment pursuant to paragraph (d)(1) of this section, notice shall be given at least three days prior to the deduction. In all other cases, notice shall be given at least three weeks before the deductions may commence. Such notice shall contain the amount overpaid in total and per pay period, the total amount to be deducted and the date each deduction shall occur followed by the amount of each deduction. The notice shall also provide notice to the employee that he or she may contest the overpayment, provide the date by which the employee shall contest, and include the procedure by which the employee may contest the overpayment and/or terms of recovery, or provide a reference to where such procedure can be located.

(f) Procedure. The employer shall implement a procedure by which the employee may dispute the overpayment and terms of recovery, and/or seek a delay in the recovery of such overpayment. Dispute resolution provisions in collective bargaining agreements existing at the time of issuance of these regulations which provide at least as much protection to the employee shall be deemed to be in compliance with this section. Dispute resolution provisions in collective bargaining agreements executed after the issuance of these regulations which provide at least as much protection to the employee and which specifically reference this section shall also be deemed to be in compliance with this section.

(1) The employee may only respond within one week from the date of the receipt of the notice of intent to recover overpayments that is prepared in accordance with subdivision (e) of this section.

(2) The employer shall reply to the employee's response within one week of receipt of the employee's response. Such reply shall address the issues raised by the employee in his or her response, and contain a clear statement indicating the employer's position with regard to the overpayment, including whether the employer agrees with the employee's position(s) regarding the overpayment or disagrees with the employee's position(s) and provide a reason why the employer agrees or disagrees.

(3) The employer shall give the employee written notice of the opportunity to meet with the employer within one week of receiving the employer's reply to discuss any disagreements that remain regarding the deductions.

(4) The employer shall provide the employee with written notice of the employer's final determination regarding the deductions within one week of this meeting. In making a final determination regarding the existence of an overpayment, the employer shall consider the agreed upon wage rate paid to the employee and whether the alleged overpayment appeared to the employee to be a new agreed upon rate of pay. When making a final determination regarding the amount of the deduction to be made per pay period and the date such deduction(s) shall commence, the employer shall consider the issues raised in the employee's request regarding the amount of each deduction.

(g) Should employees avail themselves of the procedure set forth in subdivision (f) of this section, the employer may not commence taking the deduction until at least three weeks after issuing the final determination. Where the entire overpayment may be reclaimed in the next wage payment after the overpayment, the employee shall provide their response to the employer within the two days of receipt of the notice set forth in subdivision (e) of this section to postpone the deduction while the procedure set for in subdivision (f) of this section is followed. The employer is required to repay the employee for any deduction found to be improper no later than the time period provided for payment of wages earned on the day of that determination, and is permitted to make the repayment immediately.

(h) The failure of an employer to afford this process to the employee will create the presumption that the contested deduction was impermissible.

(i) Nothing in this section shall be construed as abridging the rights of the employer or employee to seek redress in any other forum, including with the Department of Labor.

N.Y. Comp. Codes R. & Regs. Tit. 12 § 195-5.1