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Notice and Comment Period Ends for NYSDOL’s Revised Proposed Regulations on the Use of Payroll Debit Cards

    September 13, 2016

     

    On June 15, 2016, the New York State Department of Labor (NYSDOL) issued revised proposed regulations (first issued May 27, 2015, and first revised October 28, 2015) setting forth specific requirements that employers must follow for each of the following permissible methods for the payment of employee wages – cash, check, direct deposit, and payroll debit card.  Notably, the proposed regulations impose new burdens on employers who offer payment methods via direct deposit or payroll debit cards.  The 30-day notice and comment period for the revised, proposed regulations ended July 15, 2016.  If the proposed regulations are adopted, employers will have six months after publication of the final rule (possibly as early as the first half of 2017), to modify wage payment practices, especially with respect to the use of direct deposit and payroll debit cards.  In light of some of the new requirements, most New York employers will likely have to re-enroll those employees who receive payment of wages by direct deposit or payroll debit cards.

    For employers in New York who wish to offer payment of wages by direct deposit or by payroll debit card, the proposed regulations require employers to provide written notice of the permissible wage payment methods and to obtain informed, voluntary, written consent from employees in advance of the use of one of the permissible methods.  The written notice to employees must consist of the following:

    1. A description of all of the employee’s options for receiving wages;
    2. A statement informing the employee that the employer may not require the employee to accept wages by payroll debit card or by direct deposit;
    3. A statement that the employee may not be charged any fees for services that are necessary for the employee to access his/her wages in full; and
    4. If payment by payroll debit card, the employer must provide a list of locations where to access and withdraw wages at no charge within reasonable proximity to the employee’s home or place of work.

    Employers must provide the notice in English and in the primary language of the employee once the template notice and consent in such language is available from the Commissioner of Labor.

    The consent must also be written and given following receipt by the employee of the written notice of the terms and conditions of the method of payment.  The consent must be obtained without intimidation, coercion, or fear of adverse action by the employer for refusal to accept payment of wages by direct deposit or payroll debit card.  Employers are prohibited from conditioning hire and continued employment upon the acceptance of a method of payment or for withholding consent for a method of wage payment.  In addition, the employer is prohibited from engaging in unfair, deceptive, or abusive practices in relation to the method or methods of payment of wages.  Moreover, employers and their agents must not discriminate or retaliate against employees who do not consent to the payment of wages by direct deposit or payroll debit card.  Employee consent may be withdrawn at any time, but the employer is granted a reasonable period of time, but no longer than two full pay periods to finalize the change. 

    Employers may provide notice and obtain consent electronically but employees must be informed that the notice can be viewed and printed at work at no cost.

    Although the proposed regulations provide additional requirements for employers who pay wages by check or by direct deposit, the bulk of the proposed regulations is devoted to the regulation of the use of payroll debit cards as a method for the payment of wages.  In order to offer the payment of wages by payroll debit card, employers must receive written consent from employees at least seven business days prior to taking action to issue payment of wages by debit card and such consent is not effective during such seven days.  Employers must ensure that employees will have local access to an ATM that offers no-cost withdrawals and that the employee is provided at least one method for a no-fee withdrawal of the total amount of wages for each pay period or for the balance remaining on the payroll debit card.  Employers will be prohibited from charging employees a fee, direct or indirectly, for just about all services and transactions associated with the debit card.

    Employers are subject to additional restrictions.  The payment of wages by payroll debit card cannot be linked to any form of credit.  The employer cannot pass on any costs, nor receive any kickback or other remuneration from the issuer, card sponsor, or any third party delivery wages by payroll card.  The funds linked to the payroll debit card account cannot expire, but may be closed for inactivity provided the issuer gives reasonable notice to the employee and the remaining funds are refunded within seven business days.  Employees must be provided 30-day written notice for any changes to the terms and conditions of the payroll card (in English or in the language the employee understands, in 12-point font).  If the issuer charges any new or increased fee before the 30-day notice period expires, the employer must reimburse the employee for those charges.  For employees covered by a valid collective bargaining agreement that expressly provides the method or methods by which wages may be paid, the employer must obtain approval from the union before paying by payroll card.

    The revised, proposed regulations will not apply to any person employed in a bona fide executive, administrative, or professional capacity and whose earnings are in excess of the dollar threshold set forth in Section 192(2) of the Labor Law or for employees working on a far not connected to a factory.

    Employers should review their existing payroll practices and policies and notice and consent forms with respect to the use of direct deposit and payroll debit cards as well as consult with payroll companies and payroll debit card providers to ensure that compliance with the new wage payment regulations.

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