Friday, July 8, 2016

Connecticut Enacts Paycard Law

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In June, Connecticut Governor Dan Malloy signed Senate Bill 211 into law. This law allows employers to use paycards to pay wages to Connecticut employees as long as certain conditions are met. The effective date of the new law is October 1, 2016.

Employees must have the option to receive wages by direct deposit and paper check. Connecticut employees must voluntarily authorize use of the payroll card in writing or electronically. It cannot be a condition of employment.

Before the employee receives the payroll card, the employer must provide a written notice to the employee. The notice must explain various items, including the terms and conditions of the payroll card and an itemized list of fees. Each pay period, employees must be allowed to make at least three free withdrawals from the payroll card, including one for the full amount of net wages. The employer’s costs associated with the payroll card cannot be deducted from or charged against the employee’s wages.

The Connecticut Labor Commissioner may adopt paycard regulations. It is also considering conducting a study of payroll card usage and the actual incidence of fees. The Connecticut Labor Commissioner has until October 1, 2018 to determine whether to conduct the study.

The APA’s Government Relations Task Force Subcommittee on Payroll Cards has supported various payroll card bills in the Connecticut state legislature in 2016. In February, Subcommittee Chair Cathy Beyda, Esq., testified before the state’s Joint Committee on Labor and Public Employees. In May, APA sent a letter with other groups encouraging the governor to sign the paycard bill into law. This new law is considered to be a victory for the electronic form of payment.

Check back with Pay News Now as we continue to track the impact of this new law.