In recent years, the world of employment litigation has seen a rise in both the volume and the high stakes of wage-based claims filed by employees against their employers. One such hot-button issue in New York involves employee challenges to employers' alleged deductions of certain wages from their paychecks. New York Labor Law §193 protects employees from such unlawful wage deductions, and courts are now being called upon to decide whether there has been an unlawful “deduction” from wages sufficient to bring a claim under §193. One particularly tricky issue arises when the employer allegedly fails to make any payment at all, and the employee attempts to bring a claim against the employer pursuant to §193. Logically, a “deduction” from the amount of wages due to an employee connotes a reduced payment, in contrast to an entire failure to pay anything.

In 2012, the New York Court of Appeals issued a controversial opinion in Ryan v. Kellogg Partners Institutional Services.1 The court in Ryan, in dicta, made a passing comment that a failure to pay wages may constitute a “deduction” under §193. The question of whether a deduction occurred, however, was never raised, briefed or argued before the Court of Appeals, thereby strongly calling into question what analysis, if any, the court devoted to this critical point. In fact, following Ryan, the majority of courts that engaged in a substantive analysis of this issue have resoundingly concluded that an employer's failure to pay any wages at all does not qualify as a “deduction” under §193.

In this article, we first discuss the contours of §193 in order to appreciate what the Legislature envisioned when enacting this statute. We then analyze Ryan and a series of more recent decisions arriving at contrary conclusions in the context of a total nonpayment of wages. Based upon the existing body of case law, as well as a plain reading of the statute, it is clear that §193 is aimed at protecting employees from employers' attempts to unlawfully reduce their wages, in contrast to employers failing to pay wages outright.

Intent and Scope of Labor Law §193

The original purpose of §193, enacted in 1966, was to prevent employers from unfairly taking advantage of their employees by unlawfully reducing the amount of employees' paychecks, and instead placing the risk of loss for such things as damaged or spoiled merchandise on the employer.2 The current version of §193, which was recently amended in 2012, precludes employers from making any deductions from wages except in specific, enumerated circumstances.3 Those circumstances include explicit categories of deductions that employees may elect to authorize their employers to remove from their paychecks, including, by way of example, insurance premiums, contributions to bona fide charitable organizations, discounted parking passes, fitness/health club membership dues, and day-care expenses.4 The common denominator among these permissible deductions is that they relate to payments withheld for specific benefits or programs. Violations of §193 subject employers to penalties as set forth in Labor Law §198 including, but not limited to, compensatory damages equal to the amount of the unlawfully deducted wages, liquidated damages, and reasonable attorney fees.