Monday, November 16, 2015

New York Releases Proposed Payroll Card Regulations

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The New York Department of Labor recently released revised proposed regulations that will impact any employer using payroll debit cards in New York. Employers will be faced with some tough provisions if they want to offer payroll debit cards. The proposed revised regulations include that:

  • Employees have to agree to the payment method and employers will need to get the consent seven days prior to the first payment For anyone on a weekly pay schedule that pretty much guarantees the first wage payment will be on a paper check (it will also affect employees who are hired midway through a biweekly or semimonthly pay schedule).
  • Employers must also provide free ATM access. Employers will need to make sure employees are able to withdraw not only their entire pay for the period but the entire balance on the card, without cost (the card provider might also provide employees with convenience checks, so the employee can get every dollar and cent).
    • Specifically, the rules say that the employer will need to provide access to one or more ATMs that offer withdrawals at no cost to the employee. Many employers in New York have paycard programs that already provide free access to an entire network of ATMs, however, that benefit is generally dependent upon the number of employees in the program (currently, a smaller employer, or a large employer with few enrolled workers, is less likely to be able to offer that benefit).
    • Employers will also need to provide employees with a list of ATMs near the place of employment.

Any discussion of payroll debit cards is going to touch on the associated fees. New York has a laundry list of prohibited fees. Many of these are expected. For example, no payroll card program should charge a fee for the card itself or for loading it. Similarly, one wouldn’t expect to see a fee for point-of-sale transactions or for monthly maintenance. The absence of these fees differentiates payroll debit cards from other general purpose reloadable debit cards. Payroll card programs may need to adjust their fee schedules to eliminate fees for overdrafts or declined transactions, for replacement cards, and for account inactivity.

Check back with Pay News Now for more updates on payroll debit card legislation across the country.