Regulations Discussed Payroll Debit Cards and Direct Deposit

The New York Industrial Board of Appeals has revoked recently issued wage payment regulations, and has clarified certain aspects of the law regarding payment by payroll debit card.

Background
The New York Department of Labor recently issued regulations (p. 8) that provided clarification and specification as to permissible methods of payment. The regulations addressed (among other things) payment of wages by payroll debit card and direct deposit. The regulations were scheduled to take effect on March 7, 2017.

Regulations Revoked
The New York Industrial Board of Appeals ("Board") has issued a decision revoking the regulations noted above, finding them invalid.

Clarification of the Law
In the Resolution of Decision that revoked the regulations, the Board also clarified that:

• It is already illegal for an employer to require an employee to receive wages by payroll debit card. New York Labor Law (section: 192) requires the advance consent of an employee before an employer may make payment of wages by payroll debit card.
• With respect to fees that employees must pay when using payroll debit cards to access their wages, it is illegal for an employer to make any direct or indirect charge to an employee to receive his or her wages (New York Labor Law section: 193) and these same employees already face the possibility of paying fees to licensed check cashers if they choose to use their services to cash their paychecks.

The revoked regulations prohibited financial institutions from charging fees for banking services to employees using payroll debit cards. In revoking the regulations, the Board asserted that the New York Labor Commissioner did not have authority to act in this area.

Note: Further legal action regarding the regulations may be forthcoming. Employers with questions on how to proceed are advised to contact a knowledgeable employment law attorney.

Click here to read the decision.

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