31 January 2024

Federal And State Overview: Payment Of And Deductions From Wages

KI Legal


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Employers in New York must comply with federal, state and in some cases, local wage and hour laws.
United States Employment and HR
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Employers in New York must comply with federal, state and in some cases, local wage and hour laws.

The Fair Labor Standards Act (FLSA) is the primary federal law governing wage and hour standards for most full- and part-time employees in both public and private employment. The FLSA establishes, among other things, minimum wage, overtime pay requirements, recordkeeping obligations, and child labor restrictions. The Department of Labor (DOL), through its Wage and Hour Division (WHD), enforces the FLSA.

New York Labor Law, and more specifically The New York Minimum Wage Act[1] (NYMWA), is the primary state law governing wage and hour standards for every employer in New York. The NYMWA establishes, among other things, minimum wage, overtime pay requirements, callback/Report-in pay, and wage payment requirements. The commissioner of the New York State Department of Labor (NYSDOL) enforces New York Labor Law.

In addition to the NYMWA, New York has wage orders that modify some wage and hour obligations in specific industries. Wage orders are regulations specific to certain industries that permit employers to deduct specific allowances from the minimum wage for things like meals, tips, and lodging. The Hospitality Wage Order, for example, covers employees in both the hotel and restaurant industries.

The Fair Labor Standards Act

An employer's basic requirements under the FLSA are to pay nonexempt employees—i.e., employees who get paid on an hourly basis—a minimum hourly wage and overtime if an employee works more than forty (40) hours in one week.

Nonexempt employees are entitled to a minimum of $7.25 per hour unless an applicable state law sets a higher minimum wage. Wages required by the FLSA are due on the regular payday for the pay period covered. Furthermore, the FLSA requires employers to pay nonexempt employees at least 1.5 times their regular rate for every hour worked in excess of 40 hours in one workweek.

Under the FLSA, employers generally may not make deductions from employee wages for items considered primarily for the benefit or convenience of the employer if doing so would result in a reduction of the employee's wages below the minimum wage. Deductions subject to this restriction include, for example, the cost of employer-required uniforms and the cost to repair damages to the employer's property caused by the employee. Only in certain very limited circumstances may an employer make deductions that would reduce an employee's earnings below the minimum wage. For example, an employer could make such a deduction if the employer had made a prior loan or pay advance to an employee.

New York State Law

The New York Labor law imposes various rules and conventions regarding the payment of wages. For example, employers must notify employees and keep records about employees' earnings including employees' regular hourly rate, overtime rate, and—if applicable—allowances taken by the employer for tips, lodging, or meals. Also, employers may only pay nonexempt employees by direct deposit if the employees have provided written authorization. It is important to note, however, that these are not the only examples of rules regarding the payment of wages—New York labor law imposes many such regulations.

In New York City (the Five Boroughs), Long Island, and Westchester, the general minimum wage for nonexempt employees is $15.00 per hour. For the remainder of New York State, the general minimum wage is $14.20 per hour. However, there are plans to raise the general minimum wage to $15.00 per hour in all counties, so employers in counties where it is below $15.00 per hour should be wary of these impending increases.

A New York employer may deduct from an employee's wages under limited circumstances. A deduction is permitted if it is made under state or federal law, such as for an employer-sponsored pre-tax contribution plan approved by the IRS or a local taxing authority for employee benefits.

If deductions are for the employee's benefit, the employee must voluntarily and expressly authorize the deduction in writing after the employer gives written notice about the terms and conditions of the deduction. Examples of these types of deductions are deductions for employee commuter benefits programs, pensions, and health and welfare benefits.

Finally, an employer may deduct from an employee's wages to recover accidental wage overpayment caused by the employer's mathematical or clerical error, or to recover for wage advances. There are certain procedural requirements that an employer must follow to make these types of deductions.

New York Wage Orders

Wage orders are regulations that set certain industry-specific minimum wage and deduction standards. New York state has wage orders for the following industries:

  1. Hospitality Industry/Fast Food Workers;
  2. Farm Workers;
  3. Building Service Industry;
  4. "Miscellaneous" Industries; and
  5. Non-Profit Organizations.

State and federal regulations regarding the payment of wages are dense and can be difficult to navigate. This article provides only a brief overview of this vast body of law. An employer's noncompliance with these laws can have detrimental effects on the employer's business, its relationship with its employees, and its reputation. KI Legal's Labor and Employment Division specializes in helping businesses navigate and stay compliant with these wage and hour provisions, with a particular focus on restaurants and hospitality businesses. If you are a restaurant owner or operator and have questions or concerns regarding wage and hour laws, do not hesitate to reach out to us by calling (212) 404-8644 or emailing We are here to help.


1. N.Y. Lab. Law §§ 650 to 655.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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