HR Alert

Kentucky Adds Direct Deposit and Payroll Cards to Permissible Wage Payment Methods

Law Also Addresses Electronic Statements for Certain Employers

A new law in Kentucky adds direct deposit and payroll card accounts to permissible wage payment methods, and also addresses electronic statements for certain employers.

Background
Under current Kentucky law, wages due to an employee are payable in legal tender of the United States or checks on banks convertible into cash on demand at full face value, subject to the allowances made by law.

State law also requires that employers with 10 or more employees who pay their employees by check or otherwise, making deductions from the salaries and wages due said employees, must state specifically the amount for which the deductions are made. Each such employer--at the time of payment of salary or wages to each employee--must furnish the employee a statement giving the amount of each deduction and the general purpose for which the deduction is made.

Direct Deposit and Payroll Cards
Under the new law, wages due to an employee are payable in legal tender of the United States, checks on banks, direct deposit, or payroll card accounts convertible into cash on demand at full face value, subject to the allowances made by law.

However, an employee may not be charged an activation fee, and the payroll card account must provide the employee with the ability--without charge--to make at least one withdrawal per pay period for any amount up to and including the full account balance.

Note: Employers utilizing payroll cards must also comply with certain other laws and regulations, including guidance from the federal Consumer Financial Protection Bureau.

Electronic Statements
The new law also addresses the requirements noted above regarding electronic statements for employers with 10 or more employees. Such employers--at the time of payment of salary or wages to each employee--must furnish the employee a paper or electronic statement giving the amount of each deduction and the general purpose for which the deduction is made.

Note: If an employer provides an electronic statement, then the employer must provide access to a computer and printer for review and printing by the employee.

The law is expected to take effect on June 29, 2017. Click here to read the text of the new law.


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