The issue of payroll cards is now before the New York State Legislature where it properly belongs. A. 6771-A and S. 5208-A would require important consumer protections on payroll card accounts and put an end to the debate regarding appropriate regulation of this beneficial payment method. As you may recall, in September of this year the New York State Labor Commissioner adopted controversial regulations addressing permissible methods of wage payment. The regulations would have imposed unduly burdensome requirements on employers and providers who offer direct deposit and payroll cards, making it less likely that these methods would be offered to employees. Global Cash Card successfully challenged the regulations, which were ultimately revoked on the ground that they exceeded the Labor Commissioner’s authority. The determination revoking the regulations is currently on appeal.
In the meantime, Global Cash Card and others are working on legislation that would clarify the obligations of employers under New York Labor Law. A. 6771-A and S. 5208-A would make clear that payroll cards must be offered on a voluntary basis along with both paper paychecks and traditional direct deposit. Employees in New York who elect a payroll card must be able to withdraw their full net wages each pay period without cost. In addition, they must be provided one free withdrawal at an in-network ATM each week. The legislation also would require that employees be provided at least two methods of accessing their account balance, access to electronic and written transaction histories, and one free replacement card each year upon request – all without charge to the employee. In addition, the legislation would require employers who offer payroll cards to notify their employees of all of their wage payment options, including the terms and conditions of the payroll card account, and of the methods available for accessing their wages and account balance without cost. Under the proposed legislation, payroll cards could not be linked to any form of credit and certain fees would be prohibited.
The legislation goes further than the payroll card provisions enacted in other states. Nevertheless, consumer groups and unions that supported the Labor Commissioner’s regulations oppose the legislation in the hope that the regulations will resurface. In addition, they are urging legislators to oppose the bills claiming, among other things, that the legislation would weaken consumer protections and invite abusive practices. Global Cash Card is working hard to dispel these misconceptions and to provide legislators with the facts about the use and benefits of payroll cards.
About the Author: Cathy Beyda, a Paul Hastings attorney, is recognized in the industry as a leading authority on the treatment of payroll cards under the state wage and hour laws.