News & Updates

New York State Department of Labor Adopts Direct Deposit and Payroll Debit Card Regulations October 5, 2016

A regulation that clarifies and specifies the acceptable methods by which employers in New York State may pay wages to certain employees will take effect on March 7, 2017. The regulation, adopted by the state's Department of Labor earlier this fall and codified at section 192 of the New York Labor Law, covers the traditional methods of payment of wages by cash and check, but also sets forth the procedures employers must follow when paying wages by direct deposit or payroll debit card. According to the new regulation, all employees who work in New York State are covered, other than persons employed in a bona fide executive, administrative, or professional capacity earning over $900 per week, or employees working on a farm not connected with a factory.

An employer who wishes to pay an employee covered by the new regulation by direct deposit or payroll debit card must provide written notice to the employee and obtain the employee’s written consent. The written notice must:

  • Advise the employee, in plain language, of all options for receiving payment of wages;
  • Inform the employee that the employer is prohibited from mandating that the employee accept wages by direct deposit or payroll debit card;
  • Notify the employee that he or she may not be charged any fees to access his or her wages; and
  • If the employer is offering employees the option of payment via payroll debit card, include a list of locations, within reasonable proximity to residence or place of work of the employee, where the employee can access and withdraw wages free of charge.

The employer must also obtain the employee’s informed consent before issuing payment by direct deposit or payroll debit card. The informed consent, however, cannot be obtained by the employer through intimidation, coercion, or fear of adverse action for the employee’s refusal to accept payment by such methods. Furthermore, an employer is forbidden from making payment by direct deposit or payroll debit card a condition of hire or continued employment, and is prohibited from discharging, penalizing, or discriminating against an employee because the employee refuses to consent.

If an employee withdraws his or her consent, an employer has no more than two full pay periods to comply with the employee’s request.

The written notice and written consent, which must be provided to the employee in English and the primary language of the employee, may be supplied to and secured from the employee electronically — provided that the employee is notified that he or she has an opportunity to view and print the notice and consent while at work, at no cost.

Specific Requirements For Payment of Wages By Direct Deposit

To pay wages to an employee by direct deposit in compliance with the new regulation, an employer, in addition to providing written notice and obtaining written consent, must ensure that the direct deposit is made to a financial institution designated by the employee. An employer must also provide a copy of the written consent to the employee and retain a copy throughout the employee's employment, and for six years after the last payment of wages by direct deposit.

Specific Requirements For Payment of Wages By Payroll Debit Card

Like with payment of wages by direct deposit, an employer seeking to pay wages to an employee by payroll debit card must provide written notice to the employee and obtain written consent from the employee. An additional requirement for payment via payroll debit card, however, is that the written consent must be received by the employer at least seven business days prior to taking action to issue the payment of wages by payroll debit card. There are numerous other onerous requirements placed on an employer that wishes to pay an employee by payroll debt card which include, but are not limited to:

  • An employee having access to one or more no-fee automated teller machines located within a reasonable travel distance to the employee’s workplace or home;
  • For each pay period, an employer must provide the employee with at least one no-fee method to withdraw his or her entire wages or balance remaining on the payroll debit card; and
  • The agreement between the employer and the card issuer must require that the funds on the payroll debit card shall not expire.

Prior to the March 7, 2017 effective date of the new regulation, employers in New York State should carefully review their payroll practices and procedures to ensure that they are in compliance with the updated provisions of section 192 of the New York Labor Law vis à vis payment of wages by direct deposit or payroll debit card. Members of Goldberg Segalla’s employment and labor team stand ready to assist employers with any questions or concerns regarding these changes. For further information, please contact: 

 

October 6, 2016

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