Authorizes and regulates the use of payroll card accounts

Section 2 amends section 192 of the Labor Law to provide that employers may pay employee wages in the form of cash, a paper check, direct deposit or via payroll cards. But an employer may not pay wages by payroll card unless the employer also offers the employee the option of payment by paper check and direct deposit. An employee at any time may withdraw consent to be paid via direct deposit or payroll card, and an employer must cease to pay in that manner within two pay periods of the notification. The employer must maintain written authorizations for a set period.

Section 3 amends the Labor Law by adding sections 192-a, 192-b and 192-c, which provides for the payment of wages using payroll cards. 192-a provides that prior to paying employees using payroll cards, employers must provide written notice of the terms and conditions, including all fees that may be assessed, of the payroll card program in English and other languages. In order to pay wages with payroll cards, employees must be provided with at least one network of ATMs that provide no-cost cash withdrawals and balance inquiries; a method for an employee to withdraw his or her entire net pay without a fee; a periodic statement to the employee or a free means for an employee to regularly check his or her balance and transaction history; free customer service; and one free replacement payroll card per year. The payroll card program may not be linked to any form of credit. Upon termination, employees must be told that they can terminate the payroll card at no cost.

192-b provides for confidentiality of employee personal identifying information, and prohibits employers from accessing any information regarding transactions made by the employee cardholder.

192-c provides that employers may not intimidate or coerce employees into accepting payment through a payroll card account; obtain consent through unfair means; retaliate against an employee who does not choose to be paid via a payroll card or based on cardholder employee transactions; pay wages to an employee through a payroll card account that charges certain fees to cardholders; receive compensation from a payroll card issuer based on the number of cardholder employees or fees paid by cardholder employees; and employers may not pay wages to an employee through a payroll card account that charges any cardholder an overdraft fee.

Section 4 amends section 198 of the Labor Law to permit the Labor Commissioner to bring any legal action necessary for violations of these provisions and permits a court to order any appropriate relief, including injunctive relief. A court or the Labor Commissioner may enjoin an employer who has committed repeat or willful violations of these provisions from paying wages by payroll card for a period of two years.

Section 5 makes a technical change to comport with a 2014 amendment to the Labor Law. Section 6 contains a severability clause.

Section 7 sets the effective date (180 days after it shall have become a law).

Justification

Payroll cards are an increasingly common method for paying employee wages, and can be a convenient and efficient tool for employers and employees alike. However, some payroll cards contain significant restrictions and charge fees for essential services, often times with inadequate notice to employees. For low-wage workers, payroll card fees can bring their earnings below the minimum wage. Although existing provisions of the New York Labor Law have been applied to the use of payroll cards by employers, there is no law that directly governs their use. This legislation is intended to provide clarity and guidance for employers and protect cardholder employees.

Fiscal implications

None to the State.

Effective date

180 days after it shall have become law.