New York Paycard Rule Provides Few Concessions


New York employers may pay workers using a payroll card as long as a seven-day initial waiting period is observed, written notice is provided and related fees are prohibited, among other conditions, according to final rules issued by the New York Labor Department and published in the Sept. 7, 2016, New York Register and effective March 7, 2017.

The conditions for making wage payment by payroll card changed little during an extended rulemaking process that began when the rules were proposed in the May 27, 2015, New York Register and included extended comment periods and two revised rulemakings. 

Payroll professionals’ concerns largely focused on three issues:  

Responding to the requirement that employers must receive voluntary written notice and consent from employees at least seven business days before wage payment is made through a payroll debit card, Bill Dunn, CPP, said in a July American Payroll Association article that “this means that once an employee has selected the payroll card, the employer must wait seven days before doing anything related to directing a payment to that card account.”  

“For employees paid weekly, this guarantees that they will be receiving a paper check on the next payday,” said Dunn, who serves as APA's director of government relations. The waiting period also would apply to workers already using payroll cards.

Employees must be provided with a plain-language description in English and their primary language (once a template in such language becomes available from the labor commissioner) of all options for receiving wages, a statement that they may not be charged fees to access wages and must be provided a list of locations to access and withdraw wages at no charge and within reasonable proximity to their place of residence or work.

Such notification requirements will be expensive and inconvenient for employers, the APA article said.

Regarding the fees that are prohibited and which include those related to loading the payroll debit card,  point of sale transactions,  overdraft, account inactivity, accessing account information, the provision of written statements and transaction histories and replacement of the card at reasonable intervals, the APA offered in a June newsletter that “the fact that payroll cards are offered through the employer channel should not make employers responsible for the costs of banking services that are not essential to full and free access to wages.” 

To such concerns, the labor department’s final rules offered some concessions.  

Under the final rule, prior consents and authorizations for wage payment by payroll debit card are valid “so long as such notices are provided to employees before the effective date of this rule and employees are expressly notified of their right to withdraw consent through such notices,” the state Labor Department said in its assessment of public comments.

In addition, “a link to a website which provides a list or mechanism by which an employee can access a list of ATM locations which provide local access is sufficient to satisfy the notice requirements,” the department said.

However, the seven-day waiting period and the fees remain largely as proposed.

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