On May 27, 2015, the New York State Department Of Labor (“NYSDOL”) published proposed rules addressing the payment of wages by payroll debit cards. Pursuant to the draft regulations, prior to paying an employee by payroll debit card, an employer must:
A. obtain the written consent of the employee;
B. provide the following information in writing, in at least 12-point font, at least seven business days prior to seeking consent to issue wages by payroll debit card, in the employee’s primary language or in a language that the employee understands:
i. a plain language description of all of the employee’s options for receiving wages;
ii. a statement that the employer may not require the employee to accept wages by payroll debit card;
iii. a statement that the employee may not be charged any fees for services that are necessary for the employee to access his or her wages in full; and
iv. a list of locations where the employee can access and withdraw wages at no charge to the employee within reasonable proximity to his/her place of residence and place of work; and
C. obtain the employee’s informed consent without intimidation, coercion, or fear of adverse action by the employer for refusal to accept the payroll debit card or payroll debit card account.
Further, under the proposed regulations, an employer may not deliver payment of wages by payroll debit card unless each of the following is provided:
A. at least one network of automated teller machines that offers withdrawals at no cost to the employee;
B. at least one method of withdrawal up to the total amount of wages for each pay period or balance remaining on the payroll debit card without the employee incurring a fee;
C. upon the employee’s written or oral request, the following written statements must be provided either electronically or on paper:
i. a periodic statement not less frequently than monthly, or if there is a balance but not activity with respect to the payroll debit card, not less frequently than every three months;
ii. a transaction history covering 12 months preceding the request, which shall include all transactions, including deposits, withdrawals, fees charged or other transactions by any entity from or to the employee’s payroll debit card account; and
iii. electronic balance notifications on a per day or per transaction basis.
D. An annual electronic or paper notice of the right to obtain a transaction history, annual statement, or periodic statement on request.
In addition, an employer utilizing debit cards in lieu of a paper check must keep the employee’s consent on record for six years.
The NYSDOL estimates that approximately 13,000 businesses in New York State utilize payroll debit cards to pay approximately 200,000 employees. Employers who currently use or wish to use this method of payment should take steps to ensure compliance with these rules, if implemented.