Labor & Employment Law

Employer cannot make unauthorized deductions

Employer cannot make unauthorized deductions
Source: Adjunct Law Prof Blog; http://lawprofessors.typepad.com/adjunctprofs/

Reproduced with permission. Copyright © 2008, Mitchell H. Rubinstein, Esq., Adjunct Professor of Law, St. Johns Law School and New York Law School, All rights reserved.

State labor law is often an overlook body of employment law as Pachter v. Bernard Hodes Group, ___N.Y. 3d___(June 10, 2008), a NYS Court of Appeals decision, demonstrates. This case involves two certified questions from the 2d Circuit. After a Vice-President, who elected to be paid via sales commissions left his employ, a dispute arose as to whether certain deductions could be made from his paycheck. Section 193 of the New York Labor Law prohibits unauthorized deductions. What made the decision difficult was that there was a question whether "executives" were within the definition of employee. The court holds that they are. As the Court stated:

Hodes argues that, despite the broad definition of "employee" in subdivision (2) of Labor Law § 190, the term is modified by the language in subdivisions (5), (6) and (7) that excludes individuals employed in executive capacities. We disagree. It is evident from the text and structure of article 6 of the Labor Law that executives are employees within the meaning of Labor Law § 190 (2). Although executives are removed from the definitions of certain subcategories of employees in Labor Law § 190 (5), (6) and (7), those provisions are not intended to limit the scope of who qualifies as an "employee" under subdivision (2). Rather, their purpose is to eliminate executives from particular requirements in article 6, such as the frequency of wage payments to manual workers, railroad workers, commission salespersons and clerical or other workers (see Labor Law § 191).

The second issue concerned when a commission was earned and became a wage. The court held that in the absence of a written instrument, a commission becomes a wage as determined by the parties express or implied agreement, or if no agreement exists by the default common law rule that ties the earning of a commission to the employees production of a ready, willing and able purchaser.

Mitchell H. Rubinstein

[Observation: It is often said that although not all public employees are public officers, all public officers are public employees.]

Full post as published by New York Public Personnel Law on June 13, 2008 (boomark / email).