April 4, 2017
Contact: Richard Loconte, 212-709-1691
DFS ISSUES GUIDANCE TO BANKING INSTITUTIONS REGARDING THE EFFECT OF THE MINIMUM WAGE ON THE NEW YORK EXEMPT INCOME PROTECTION ACT
DFS is providing guidance regarding how the minimum wage should be used to calculate exempt wages under EIPA
Financial Services Superintendent Maria T. Vullo announced today that the Department of Financial Services (DFS) is providing guidance to all banking institutions doing business in New York State about the effect of the amended New York Minimum Wage Law on the New York Exempt Income Protection Act (EIPA) when money judgments are enforced. EIPA limits the ability of judgment creditors and others to freeze certain funds in holders’ accounts, including certain amounts of wages. Governor Andrew M. Cuomo signed legislation in 2016 enacting a statewide $15 minimum wage plan. DFS has been asked by banking institutions doing business in New York State to provide guidance regarding how the minimum wage should be used to calculate exempt wages under EIPA.
“We are clarifying this issue to protect New Yorkers’ accounts and to help banking institutions to determine the amounts that should be frozen during the enforcement of money judgments and ensuring the banks do not restrain more funds than they should,” said Superintendent Vullo. “DFS believes that this guidance is consistent with the executive and legislative intent underlying EIPA and the Minimum Wage Law in protecting the interests of working New Yorkers.”
Under EIPA, judgment creditors may not restrain an amount equal to or less than the greater of 240 times the federal minimum hourly wage prescribed in the Fair Labor Standards Act or 240 times the state minimum hourly wage prescribed in the labor law in effect at the time the earnings are payable. New York’s Minimum Wage Law, which became effective on December 31, 2016, raised the minimum wage variably in different parts of the State and, in New York City, the minimum wage is now variable based on the size of an employer, raising the question under EIPA as to the proper amount that must be excluded from collection actions.
Given that banks may not have an account holder’s most current employment address or knowledge of the size of an employer in order to calculate exempt wages, DFS’s guidance has been sought. The Department has now advised banks that they should, to the extent practicable, calculate the exempt amount based on the account holder’s address and the size of the employer. However, if, after reasonable due diligence, this information is unavailable, DFS has advised banks to exempt from collection an amount that corresponds to the highest minimum wage in effect in the State at the time of the calculation.
For a copy of the guidance that DFS is providing all banking institutions doing business in New York State, please click here.