Clarifies methods for the payment of wages and authorizes the payment of wages by use of payroll cards

Summary of provisions

Section I amends the heading of section 192 of the Labor Law.

Section II amends subdivision 1 of Section 192 of the Labor Law to specify the methods under which wages are paid wages shall be paid in the following:

A. In lawful money of the United States

B. By check

C. By electronic automated fund transfer into an account in the same name of the employee at a financial institution designed by the employee

D. By credit to a payroll card in accordance with section 192-a of this article

Section III amends the Labor Law by adding a new section 192-a which specifies the payment of wages using payroll cards.

1) Definitions

A. "Payroll Card"

B. "Payroll Card Account"

C. "Payroll Card Issuer"

2) If an employer pays wages to employees by credit to a payroll card:

A. Employees must be allowed at least one withdrawal or transfer from the payroll each and every pay period without charge for any amount up to and including the full amount of the employee's wages for the period, except as provided in paragraph B.

B. Employees must be allowed at least one withdrawal or transfer from the payroll each and every pay period without charge for any amount up to and including the full amount of the employee's wages for the period, if wages are paid more frequently than weekly.

3) If an employer offers payroll cards to deliver wages or other compensation to their employees they must also provide the option of receiving wages or other compensation by electronic fund transfer in accordance with section 191-c of this article, where payroll cards and EFT are the only methods of compensation. Employer may utilize payroll card where EFT or financial institution not designated.

4) Employees must be provided with a means of checking their payroll card balance through an automated telephone system and one additional electronic means without cost.

5) Employers must be provided with notice of the following items in:

A. Terms and conditions relating to the use of the payroll card

B. Methods available to employees for accessing wages without costs.

C. Methods available to employees for checking the balance in the payroll card account without costs; and

D. A statement as to whether third parties may assess additional fees

6) Requires that wages paid on a payroll card must be insured by the Federal Deposit Insurance Corporation, the National Credit Union Administration, or another entity on a pass through basis to the employee.

Section IV - This act shall take effect on the ninetieth day after it shall have become law

Justification

This legislation recognizes the benefits to employers by providing the option to pay and to employees by providing the option to receive wages on a payroll card. This option would give employees a safe and reliable means to receive wages, by allowing them to access their wages at ATMs, banks and merchant locations without having to incur fees for check cashing or carry large amounts of cash. This bill would also provide financial institutions with a manner to deliver services to traditionally "unranked" people. Payroll cards provide employers with a less expensive way to deliver wages than paper checks, which is particularly useful when an employee does not have access to direct deposit services.

Legislative history

S6288A of 2012

Fiscal implications

None to the state

Effective date

Ninetieth day after it shall have become law.