Lawsuit for Unlawful Deductions Against Ingersoll-Rand Will Proceed as a Class Action

In Orgill v. Ingersoll-Rand Company, a New York Supreme Court justice granted class certification to a group of current and former sales representatives who alleged that the defendants violated New York Labor Law Section 193 by making unlawful deductions from their wages.

Specifically, the plaintiffs alleged that their employer deducted 4.762% of their wages to cover the employer’s operating expenses, and deducted an additional $50 “computer charge.”

The defendants attempted to convince the judge that individual issues would predominate at trial—thus defeating class certification—because each salesperson could have “impliedly agreed” to a different compensation arrangement.  The court rejected this argument, however, and noted that the defendants paid each salesperson according to a standard schedule set by the defendants.

A Brief Background on Unlawful Deductions

Under the New York Labor Law, an employer may only take certain, limited deductions from an employee’s paycheck.  Those deductions are listed in Section 193 and, as a general matter, consist of deductions that are for the benefit of the employee.  These deductions include contributions to pension plans, union dues, money to pay for discounted travel costs (for instance, Transitchek), gym membership dues, or 401(k) contributions.

An employer may not deduct expenses for the purpose of minimizing the employer’s risk.  For instance, one court held that an employer’s $3,000 deduction from an employee’s wages due to a customer’s failure to pay the employer was a violation of the law.  Similarly, a bakery cannot deduct the cost of stale good from its employee’s paycheck.

New York is not the only state that prohibits certain types of deductions from workers’ pay.  Keep an eye on this blog; in upcoming weeks we’ll write about the wage deduction laws in other states.