Friday, February 7, 2014

Difficult Year Ahead for Paycards


Last year was a troubling year for paycards. An employee in Pennsylvania claimed she was forced to receive her wages on a paycard and was subsequently charged excessive fees to use it. This case received national attention after the employee filed a lawsuit and led many to have negative impressions of this type of payment option. The American Payroll Association (APA) responded to the controversy with a joint press release with the National Consumer Law Center explaining the benefits of paycard use for both employers and employees. Unfortunately, the damage has already been done -- two states (Hawaii and New Hampshire) now seek to heavily regulate paycards.

Hawaii's labor department currently allows paycard use as long as it is a voluntary option for employees; however, the recently introduced Hawaii House Bill 1814 seeks to completely ban paycard use in the state.

In another blow to paycards, New Hampshire is seeking to make the payment option highly unattractive to employers through New Hampshire House Bill 1404. If passed, the bill will mandate that paycard users receive three free withdrawals per pay period as opposed to the usual one free withdrawal. It will also remove virtually all fees associated with paycards and mandate that employees are offered alternate forms of payment before being offered a paycard.

APA's Payroll Card Subcommittee of the Government Affairs Task Force (GATF) has submitted written testimony strongly opposing these bills. The testimony explains the benefits of implementing responsible paycard programs. Stay tuned to Pay News Now as we continue to track the progress of these bills.