New York DOL Regulations Regarding Payroll Debit Cards

The New York State Department of Labor recently released new regulations regarding the use of payroll debit cards. These regulations help to protect employees who may choose to use the payroll debit cards as a means to receive their wages. This is becoming increasingly popular for many companies looking to go to paperless payroll procedures.


New York DOL Regulations

What is a Payroll Debit Card?

Payroll debit cards are cards that are somewhat like a reusable debit card. They are usually tied to a bank or major credit card corporation. An example of this would be the Elite Payroll Visas that are operable through both Visa and Bancorp Bank. The consumer would possess both a card number (which would be used as a debit card number) and an actual account number and routing number for direct deposit.

New Disclosure Requirements

In order for payroll debit cards to be used by a company to distribute wages, the company is required to inform the employee of all procedures and “fine print” so to speak in a plain language format. This is important to ensure that the employee gives informed consent.

Informed Consent

The New York DOL now requires that all employers receive written consent from employees before wages can be distributed onto a payroll debit card. There must be informed consent, meaning that all debit card requirements and procedures must be presented to the employee in plain language. Consent must be obtained without fear or intimidation from an employer or third party. The consent form must be provided to the employee in both English and the employee’s primary language where applicable.


Written Consent

Online Consent as Written Consent

Consent for wages to be distributed onto a payroll debit card may be obtained online in some situations. In order for an employer to accept a consent form online, the employee must be able to print the consent form at their place of employment at no charge. In cases where the only form of check stubs are also online, the employee must also have free access to copies of wage statements through their place of employment.

When Can Wages Be Distributed After Consent is Given?

According to the new regulations, an employer must now wait at least seven days after receiving their employee’s consent to begin distributing funds via payroll debit cards. This helps to prevent confusion between companies and employees.

Access to Funds

A huge focus point of the new regulations is access to funds. The employee must have free access to funds in a reasonably close proximity to their place of employment. This means access to at least one major ATM network. In some cases, retail establishments may even offer access to funds for their employees through their own stores. Employees must not be charged any extraneous fees to access their wages.


Collective Bargaining Agreements

Employees Under Collective Bargaining Agreements

Employees whose employment contracts are covered under a collective bargaining agreement may have an additional step in setting up their payroll debit cards. If the employee contract dictates the methods in which wages can be paid, the employer may also be required to obtain consent from the union to distribute wages onto a payroll debit card.

Can an Employer Require Use of a Payroll Debit Card?

No. An employer must have another option for employees who do not choose to use a payroll debit card. In many cases, this can mean that the employer can also offer direct deposit or paper checks. If an employee feels that they are pressured into using a payroll debit card or they are told that it is a requirement to receive wages, they should contact the New York Department of Labor.

As a side-note, this employment law piece was written to educate and protect small to mid-sized businesses from labor violations. Having employees requires quality labor law protection. If you’re based in Weston, consider one of these labor posters for total employer compliance. The company that produces these employment posters has an in-house legal team who routinely review and edit these for regulations that affect employers.


New Payroll Debit Card

Do the New Payroll Debit and Electronic Deposit Regulations Apply to Me?

If you are an employee in New York that makes less than $900 a week, the new regulations apply to you. They do not, however, apply to any employee in an executive position who makes more than $900 a week. In most cases, however, this is not much of an issue because most companies using this method of wage distribution seem to employ lower wage employees.

The New York DOL regulations on payroll debit are made, first and foremost, to help facilitate convenience for employees using the payroll debit programs. They also protect employees from excessive or unnecessary fees incurred due to use of the payroll debit process. This is important to ensure that employees are able to access their wages in a fair and convenient manner. More information on the regulations of payroll debits can be found on the New York DOL website.



Article provided by Neches FCU, an Equal Employment Opportunity Employer.
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