This Bulletin Supersedes Payroll Bulletin 2368.1

Purpose:

The purpose of this bulletin is to provide agencies with updated information on the use of Deduction code 433, Unemployment Insurance Owed and notify agencies of new deduction code 509, Unemployment Insurance.

Affected Employees:

Employees who have received an overpayment of unemployment insurance benefits, as determined by the New York State Department of Labor (DOL), are affected.

Background:

The State Comptroller is authorized to offset State payments in order to collect State debts, if due process is provided. Accordingly, OSC may recoup from employees’ wages the amount owed for an overpayment of unemployment insurance benefits previously received by employees if the employee has received sufficient notice and an opportunity to be heard. The DOL makes determinations as to whether a NYS employee has received an overpayment of unemployment insurance benefits. Prior to deducting overpaid unemployment insurance benefits from an employee’s wages, the DOL will notify the employee and provide them with an opportunity to be heard.

Upon DOL determination that an employee of NYS has received an overpayment of unemployment insurance benefits, a payroll deduction may be initiated to withhold 10% of the employee’s gross earnings until the overpayment is repaid. New deduction code 509, Unemployment Insurance, is used for recoupment of overpaid unemployment insurance benefits from State employees’ wages. This code can only be used by an agency when its use is authorized by DOL, and the employee is notified of the recoupment of their wages. Agencies may take action to initiate, change or end the deduction only when instructed to do so by DOL or OSC. This deduction cannot be canceled upon employee request.

If DOL determines that, as the result of an arbitration award or settlement agreement, an employee of NYS has received an overpayment of unemployment insurance benefits, a one-time payroll deduction for the flat amount of the overpayment may be applied. Updated Deduction code 433, Unemployment Insurance Owed. This deduction will only be entered by OSC and will be applied in the paycheck in which the arbitration award or settlement agreement is processed.

Effective Dates:

This bulletin is effective immediately.

Department of Labor Actions:

The DOL will instruct agencies to initiate the 509, Unemployment Insurance deduction. The notice will include the employee’s name, social security number, the total amount due, the check date to commence the deduction and will specify the deduction will be applied as 10% of the employee’s gross earnings.

DOL will notify State Payroll of the amount of an overpayment of unemployment insurance in an arbitration award or settlement agreement scenario and State Payroll will apply Deduction code 433, Unemployment Insurance Owed in the paycheck in which the arbitration award or settlement agreement is processed.

Agency Actions for New Requests:

Agencies should disregard DOL letters sent prior to 9/1/2025 instructing agencies to use the 433 deduction code to recover unemployment insurance. New letters with updated instructions to use the 509 percentage-based deduction code will be provided.

509, Unemployment Insurance:

1. Upon receipt of the notice from DOL, enter a deduction record for the employee in the PayServ General Deduction Data panel, using deduction code 509.
2. For the Effective Date, enter the first day of the pay period for the check date the deduction is to start.
3. Update the Calculation Routine drop-down to Default to Deduction Table. This will automatically take the deduction at 10% of the employee’s gross earnings.
4. Enter the total amount due as the Goal Amount and verify the current goal balance is blank. The deduction will automatically stop when the Goal Amount is reached.
5. Save the transaction.
6. Advise the employee of the total amount due, that 10% of their gross earnings will be applied to the deduction bi-weekly, the date the deduction will start, and provide the employee with a copy of the letter supplied by DOL.

Agency Actions for Cancellations and Changes to Deduction Code 509:

If a cancellation is received from DOL, insert a new row into the General Deduction Data panel to end the 509 deduction. The Effective Date and Deduction End Date inserted must be the first day of the next available pay period to stop the deduction.

If a change is received from DOL, insert a new row into the General Deduction Data panel using the first day of the next pay period as the Effective Date. DOL will provide agencies with the new Goal Amount.

The agency must enter the new Goal Amount and remove any goal balance in the Current Goal Balance field on the panel. Agencies must verify the data entered to the form from DOL and save the transaction.

Questions:

Questions regarding this bulletin may be directed to the Payroll Deduction mailbox.

Employee questions should be directed to the Department of Labor at (888) 209-8124.