Illinois is the latest state to enact a law regulating the use of payroll cards. The law will go into effect on January 1, 2015. This brings the total number of states with laws or regulations addressing payroll cards to 21.
This law does an excellent job of addressing many of the common concerns surrounding payroll cards. One major provision of the law states that employees must explicitly agree to the payment method. So, if an employee does not agree to be paid by payroll card, the employer cannot automatically sign up the employee for a payroll card. This remains true even if the employee in question does not have a bank account. Along with being voluntary, payments by payroll card cannot be a condition of employment.
The law also sets some minimum standards for payroll card programs. Employees must be provided with at least one free withdrawal of the full balance of the card every pay period. A written transaction history must also be made available upon request and free of charge to the employee.
The law also prohibits a number of fees. For any payroll card program offered to employees in Illinois there can be:
- No initiation fees or loading fees
- No fees for accessing the card balance by phone
- No fees for point-of-sale transactions
- No inactivity fees until a full year of inactivity has passed
- Employees must be offered at least two free declined transactions each month
On balance, the APA thinks this new law manages to address the needs of the employees who use them; the needs of card providers, who provide this service; and the needs of employers – who require clarification on the legal methods of paying wages. Check back with Pay News Now often for more on developing payroll card laws happening across the country.