HR Alert

Pennsylvania: New Rules Regarding Electronic Funds Transfers and Payroll Cards

Law Effective May 3, 2017

A new law in Pennsylvania sets forth rules regarding electronic funds transfers and payroll cards. Highlights of the law are presented below.

Rules for Electronic Funds Transfers
For the purposes of any statute, rule, or regulation requiring any payment to be made in lawful money or by check (whether for wages, salaries, commissions, or other claims of any kind), the payment may be made by credit to an account in a financial institution--including a payroll card account--authorized to accept deposits or payments, if the recipient has authorized the method of payment in writing or electronically.

When wages, salaries, commissions, or other payments are transferred to an account at a financial institution as described above, an employer must provide an employee with a written or electronic statement of earnings and deductions each pay period in accordance with applicable law.

Rules for Payroll Card Accounts
In addition to any other requirements under the law, the following provisions (among other things) apply when payment of wages, salaries, commissions, or other compensation is made through transfers to a payroll card account:

  • Compliance with federal law. The employee must be issued a payroll card in accordance with federal law relating to electronic funds transfers (Regulation E).
  • Voluntariness. No employer may make the payment of wages, salary, commissions, or other compensation by means of a payroll card account a condition of employment (or a condition for the receipt of any benefit or other form of remuneration) for any employee.
  • Notice of options and methods. Prior to obtaining an employee's authorization, the employer must provide the employee with clear and conspicuous notice--in writing or electronically--of (among other things) all of the employee's wage payment options and the methods available to the employee for accessing wages without fees.
  • Certain fees prohibited. In addition to fees prohibited by the law, an employer may not use a payroll card account that charges certain fees to the employee for:
    The application, initiation, or privilege of participating in the payroll card program;
  • The issuance of the initial payroll card;
  • The issuance of one replacement card per calendar year upon request of the employee;
  • The transfer of wages, salary, commissions, or other compensation from the employer to the payroll card account;
  • Purchase transactions at the point of sale; or
  • Certain nonuse or inactivity in a payroll card account, if the nonuse or inactivity is less than 12 months in duration.
    Requests to change payment method. The employer must honor an employee's written or electronic request to change the employee's method of receiving wages from a payroll card account to direct deposit or negotiable check.
  • Compliance with federal law. The employee must be issued a payroll card in accordance with federal law relating to electronic funds transfers (Regulation E).
  • Voluntariness. No employer may make the payment of wages, salary, commissions, or other compensation by means of a payroll card account a condition of employment (or a condition for the receipt of any benefit or other form of remuneration) for any employee.
  • Notice of options and methods. Prior to obtaining an employee's authorization, the employer must provide the employee with clear and conspicuous notice--in writing or electronically--of (among other things) all of the employee's wage payment options and the methods available to the employee for accessing wages without fees.
  • Certain fees prohibited. In addition to fees prohibited by the law, an employer may not use a payroll card account that charges certain fees to the employee for:
    The application, initiation, or privilege of participating in the payroll card program;
  • The issuance of the initial payroll card;
  • The issuance of one replacement card per calendar year upon request of the employee;
  • The transfer of wages, salary, commissions, or other compensation from the employer to the payroll card account;
  • Purchase transactions at the point of sale; or
  • Certain nonuse or inactivity in a payroll card account, if the nonuse or inactivity is less than 12 months in duration.

The law is effective May 3, 2017. Click here to read the text of the law.


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