“It has become increasingly prevalent for employers to pay their employees with payroll debit cards as an alternative to checks, direct deposit and other methods due to the benefits to both employers and employees,” writes Caroline J. Berdzik, Chair of Goldberg Segalla’s Health Care practice group, and Co-Chair of the Employment and Labor Practice Group.
Payroll debit cards are commonly used in the retail and fast-food industries. They’ve been found to have benefits such as providing employees earlier access to their funds and giving those without a bank account the flexibility that comes with having a debit card to use where accepted — especially online.
This spring, New York and Pennsylvania will each enact new regulations regarding how employers can use payroll debit cards to pay employees. “Employers need to carefully review the laws of each state where they may have employees as these payroll debit laws can vary greatly,” points out Caroline. “If employers have payroll vendors or other third parties that assist with payroll, they should ensure compliance with the new laws.”