As the result of a recent reversal of opinion by the New York State Department of Labor (“NYS DOL”), employers may no longer arrange for the repayment of an inadvertent overpayment or an advance or loan to an employee by deducting such repayment from the employee’s wages – even if the employee authorizes or specifically requests such deductions. Furthermore, employers may not require employees to repay overpayments or advances by a separate transaction. The only way employers can guarantee that they will be repaid for overpayments or loans to an employee is by commencing an independent legal action against the employee.
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