Automatic Enrollment Implementation
Is automatic enrollment permissible under law?
No
Are automatic enrollment and automatic escalation implemented?
Public employees must authorize wage deferrals in writing, preventing the implementation of automatic enrollment in voluntary retirement plans. The state and its political subdivisions could collectively bargain to include automatic enrollment in their plans, but none have.
Relevant State Laws – NY Lab. Law § 193, State Fin. Law § 5
“1. No employer shall make any deduction from the wages of an employee, except deductions which:
a. are made in accordance with the provisions of any law or any rule or regulation issued by any governmental agency including regulations promulgated under paragraph c and paragraph d of this subdivision; or
b. are expressly authorized in writing by the employee and are for the benefit of the employee, provided that such authorization is voluntary and only given following receipt by the employee of written notice of all terms and conditions of the payment and/or its benefits and the details of the manner in which deductions will be made. Whenever there is a substantial change in the terms or conditions of the payment, including but not limited to, any change in the amount of the deduction, or a substantial change in the benefits of the deduction or the details in the manner in which deductions shall be made, the employer shall, as soon as practicable, but in each case before any increased deduction is made on the employee’s behalf, notify the employee prior to the implementation of the change. Such authorization shall be kept on file on the employer’s premises for the period during which the employee is employed by the employer and for six years after such employment ends. Notwithstanding the foregoing, employee authorization for deductions under this section may also be provided to the employer pursuant to the terms of a collective bargaining agreement. Such authorized deductions shall be limited to payments for: (i) insurance premiums…(ii) pension or health and welfare benefits…
2. Deductions made in conjunction with an employer sponsored pre-tax contribution plan approved by the IRS or other local taxing authority, including those falling within one or more of the categories set forth in paragraph b of subdivision one of this section, shall be considered to have been made in accordance with paragraph a of subdivision one of this section.” NY Labor § 193
New York’s State Finance Law contemplates payroll deductions made in relation to a state deferred compensation plan and states “[a]t the request of a state employee the comptroller shall, by payroll deduction, defer the payment of part of the compensation of such employee as provided in a written statement by the employee and transfer the amount so deferred to the authorized financial organization.” N.Y. State Fin. Law § 5