Notice To Financial Institutions: Wage Exemption Amount For Restraining Notices And Levies To Increase In Parts Of New York State On December 31, 2022 –

Under New York’s Exempt Income Protection Act
(“EIPA”), certain funds in deposit accounts are exempt
from most restraining notices and levies. One exemption under the
EIPA is for an amount deemed to be protected wages, with the amount
of such exemption tied to the minimum wage. As a result of an
increase in the New York State minimum wage that takes effect on
December 31, 2022, the amount of the wage exemption under the EIPA
will increase as of that date in certain parts of the State.

The EIPA took effect in 2009 and, among other things, requires
financial institutions to exempt certain funds in deposit accounts
from the reach of creditors seeking to restrain or levy on those
accounts. There are two exemptions under the EIPA: (1) for wages;
and (2) for the direct deposit or electronic payment of amounts
“reasonably identifiable as statutorily exempt” funds
during the 45-day period preceding the service of the restraining
notice or levy.

Under the wage exemption, a financial institution must make a
certain amount available to the depositor based on the amount of
the federal or New York State minimum wage (whichever is higher).
Because the New York State minimum wage will increase on December
31, 2022 for certain areas of New York State, the amount of the
wage exemption under the EIPA will also increase as of that date in
those areas. Under legislation signed into law in 2016, the minimum
wage in New York State now varies depending on the location in New
York State where the person is employed. As of December 31, 2022,
the minimum wage in New York City and Nassau, Suffolk and
Westchester Counties will remain $15.00 an hour; and the minimum
wage in all other parts of the state will increase from $13.20 an
hour to $14.20 an hour.

The corresponding wage exemptions as of December 31,
2022 are as follows: $3,600 in New York City and Nassau, Suffolk
and Westchester Counties (no change); and $3,408 in all other parts
of the State.

The New York State Department of Financial Services
(“DFS”) provided guidance to banking institutions in
April 2017 on how to determine the applicable wage exemption given
the possibility that the institution may not know where its
customer is employed. The DFS guidance states that:

• If, after reasonable due diligence, a banking institution
  obtains the most current information regarding the employment
  address of an account holder…the banking institution should
  calculate the amount of exempt wages based on such
  information.




• However, if, after reasonable due diligence, a banking
  institution is unable to obtain the most current information, the
  banking institution may use the highest minimum wage in effect in
  the State at the time of such calculation, thereby protecting the
  account holder’s wages as required by law.

Please note that the DFS guidance does not specify what type of
activity constitutes “reasonable due diligence” with
respect to these issues.

As noted above, in addition to the wage exemption, there is an
exemption for statutorily exempt funds. Under this separate
exemption, if there was a direct deposit or electronic payment of
statutorily exempt funds in an account during the 45-day period
preceding the service of the restraining notice or levy, then the
institution generally must make available to the depositor up to
$3,000 from the account despite the restraining notice or levy. The
current amount of $3,000 was increased to that amount in April 2021
and is subject to change again in April 2024, and every three years
thereafter based on changes in the consumer price index.

Please also note that federal regulations impose obligations on
financial institutions in connection with the garnishment of
accounts containing federal benefit payments.

This advisory is a general overview of the application of the
EIPA and is not intended as legal advice. The requirements of the
EIPA are very detailed and must be reviewed in their totality and
in connection with federal rules protecting certain funds from
garnishment.