Friday, March 17, 2017

New York Paycard, Direct Deposit Regulations Ruled Invalid

PNN: NY Paycard Regs

The New York Industrial Board of Appeals recently ruled that the burdensome New York regulations regarding payment of wages by paycard and direct deposit, which was scheduled to take effect on March 7, 2017, are invalid and were revoked [Global Cash Card, Inc. v. Commissioner of Labor, No. 16-120, 2-16-17].

The payroll industry feared the implementation of the regulations would have severely interfered with the ability to offer paycards in New York. The use of payroll debit cards for New York employees remains generally permissible as long as certain conditions are met (e.g., employee must consent, no fee to access full wages). Employers are no longer expected to use the sample notice and consent templates that the American Payroll Association recently commented on.

Appeal Possible
The New York State Department of Labor (NYSDOL), the agency that issued the regulations, has 60 days to appeal the Board’s ruling (i.e., until April 16, 2017)

Paycard Provider Challenged Rules
Global Cash Card (GCC), a national provider of payroll debit cards, filed a petition with the Board on October 21, 2016, alleging that the regulations were invalid or unreasonable. GCC claimed the regulations exceeded the DOL’s authority and violated separation of powers between the state legislature and the executive branch of state government, were preempted by federal banking law, and included vague and unreasonable provisions.

NYSDOL Exceeded Authority
The Board agreed with GCC, finding that the regulations are invalid because they exceed the NYSDOL’s rulemaking authority by regulating banking services. The regulations go beyond New York Labor Law §192, which deals with the relationship between employers and employees, by placing restrictions on financial institutions.

Check back with Pay News Now as we continue to monitor this issue.