Wage & Hour Counsel : Wage & Hour Lawyer & Attorney : Littler Mendelson Law Firm : Employment Law, Labor Relations

New Hampshire recently amended its wage and hour law to permit employers to make deductions from employees’ wages for “legal plans and identity theft plans without financial advantage to the employer when the employee has given his or her written authorization and deductions are fully recorded.” The amendment becomes effective on August 13, 2010.

Although this amendment is modest in nature, it does clarify an issue that previously had confused many New Hampshire employers. Prior to this amendment, the New Hampshire Department of Labor had taken the position that employers could not make deductions from employees’ wages for legal services plans or identity theft plans, even though employees had voluntarily enrolled in those plans and authorized the requisite deductions, because these plans were not identified as permissible deductions under the state’s wage and hour law. This law makes clear that such deductions are now permissible.

This entry was written by Christopher Kaczmarek.

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Effective September 21, 2009, the New Jersey Department of Labor and Workforce Development, Division of Wage and Hour Compliance, adopted a new rule allowing employers to make payroll deductions for health club membership fees or for child care services if payment is authorized in writing by an employee or pursuant to a collective bargaining agreement and approved by the employer. In promulgating this new rule, the Department of Labor amended New Jersey Administrative Code § 12:55-2.1, which sets forth the very limited circumstances in which an employer may make a payroll deduction.
 

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On May 19, 2009, the Sixth Circuit Court of Appeals found that the operator of health and fitness centers violated the salary basis requirements under the Fair Labor Standards Act (FLSA) when it deducted money from the base compensation of employees to reclaim previously paid bonuses. (Baden-Winterwood v. Life Time Fitness, 6th Cir., No. 07-4437, 5/19/09). Accordingly, the employer could not establish that the employees from whom money was deducted were exempt, salaried employees.

In its decision, the Court held that the salary basis test adopted by the U.S. Supreme Court in Auer v. Robbins, 519 U.S. 452, 117 S. Ct. 905, 137 L. Ed. 2d 79 (1997), should be applied to pay periods occurring before August 23, 2004, and the salary basis test stated in 29 C.F.R. § 541.603 should be applied to pay periods occurring after August 23, 2004. Under the Auer test, an employee is not paid on a salary basis, and thus loses exempt status, if (1) there is an actual practice of salary deductions or (2) an employee is compensated under a policy that clearly communicates a significant likelihood of deductions. In the revised Regulations, which became effective on August 23, 2004, the Department of Labor (DOL) noted that "[a]n actual practice of making improper deductions demonstrates that the employer did not intend to pay employees on a salary basis." 29 C.F.R. § 541.603(a). Under the Regulations, there is no violation of the salary basis requirements and, therefore, no loss of the exemption, unless there is an actual practice of improper deductions.

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