In 2017, 27 states have statutes and legislation that address payroll cards, with important developments occurring in Connecticut, Pennsylvania and New York, said Cathy Beyda, a lawyer at the firm Paul Hastings who focuses on banking and payment systems.
A year ago, 25 states had such statutes and legislation, Beyda said.
Here is the update:
•Pennsylvania: Legislation (S.B. 1265, Act 161), which clarifies that payroll cards were lawful in Pennsylvania, was signed by Gov. Tom Wolf (D) on Nov. 4, 2016, is to take effect May 3, 2017. The measure is the first state legislation to require one free withdrawal, Beyda said.
However, a lawsuit related to payroll cards is pending a year after the state that wages must be paid in U.S. currency or by check. The state labor department issued opinion letters, based on banking law, that said payroll cards were permissible if authorized by the employee, Beyda said.
The case (Siciliano vs. Mueller) was whether payroll cards were the functional equivalent of cash money or a check, Beyda said. The trial court ruled they were not. On appeal, the superior court affirmed the trial court decision that payroll cards cannot be required, but it said that employers may be able to provide payroll cards voluntarily, she said.
•New York: Wage-payment regulations were introduced in 2015, setting “new and unprecedented requirements,” Beyda said. The rules included a seven-day period after an employee consented to using a payroll card when an employer could not act. Additionally, the state required that employers ensure that an ATM was within reasonable travel distance to that employee’s home or work site, Beyda said.
The final rule was issued on Sept. 7, 2016, and was to be effective March 7, 2017, but a payroll card company filed a petition for review claiming that the regulations went beyond the labor department’s authority, the regulations were unreasonable and they were preempted by federal law, Beyda said. On Feb. 16, 2017, 19 days before the regulations were to take effect, the state’s industrial board ruled that the regulations exceeded the department’s authority and revoked them, she said.
•Connecticut: A bill (S.B. 211) signed by Connecticut’s governor took effect Oct. 16, 2016, Beyda said. Among the measure’s provisions, payroll cards were authorized on a voluntary basis and employers had to make certain disclosures to employees and inform them that they may receive a paper paycheck and had access to direct deposit, she said, noting that Connecticut joined Hawaii and Vermont in requiring at least three free withdrawals per pay period, one of which provides access to the full wages.
•Other actions: Eight payroll-card related bills were introduced this year in other states, including bills that are pending, have failed or were tabled in Connecticut, Iowa, Massachusetts, Pennsylvania, Virginia and West Virginia, Beyda said.
In Kentucky, Gov. Matt Bevin (R) signed H.B. 328 of March 27, making payment by direct deposit and payroll card permissible forms of payment. The measure would take effect June 29, or 90 days after the legislature adjourns. The legislature was to end its session March 30.
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