Several states have limited or regulated employers’ use of debit cards for payment of wages in response to concerns raised by employees and advocacy groups.  Most recently, the New York State Department of Labor has published proposed rules addressing the payment of wages by payroll debit cards.  If an employer intends to pay an employee using a payroll debit card, the employer must comply with the following requirements:

• Obtain written consent of the employee;
• Provide, in writing seven days prior to seeking consent, in the employee’s primary language, a description of the employee’s options for receiving wages, a statement that the employer may not require the employee to accept wages by payroll debit card, a statement that the employee will not be charged any fees for use of the card to access wages, and a list of locations where the employee can access the card to withdraw wages at no charge to the employee; and
• Obtain the employee’s informed consent without intimidation, coercion, or fear of adverse employment action by the employer for refusal to accept the payroll debit card.

Should the employee agree to the above, the proposed regulations further outline that the employer must provide at least one network of automated teller machines that offers withdrawals at no cost to the employee,  provide at least one method of withdrawal without the employee incurring a fee, provide periodic statements of balance upon the employee’s written or oral request, and provide an annual electronic or paper notice of transaction history.

The proposed regulations will require an employer to keep the employee’s consent on record for six years.

This method of employee wage payment is currently utilized by approximately 13,000 businesses in New York State. Those businesses, as well as any new businesses desiring to enact this method of payment, will be required to comply with the regulations once the new rules are implemented.

For more information about how this may impact your business, please contact:

• Julie P. Apter (716.566.5458; japter@goldbergsegalla.com)
• Caroline J. Berdzik (609.986.1314; cberdzik@goldbergsegalla.com)
• Or another member of the Goldberg Segalla Employment and Labor Practice Group.