CLIENT UPDATE

Putney, Twombly, Hall & Hirson LLP
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New York, NY 10175
Tel: (212) 682-0020

 

June 03, 2015

New Proposed Rules for Permissible Methods of Payment of Employee's Wages

On May 27, 2015, the New York Department of Labor recommended a new proposed rule governing permissible methods of payment to employees using payroll debit cards. 

The rule defines a “payroll debit card” as a card that gives access to an account with any financial institution established directly or indirectly by the employer.   Employee’s wages are transferred to this account on an isolated or recurring basis and then retrieved by the employee.

Under the proposed rule, employers are required to obtain consent from employees for wage payments via a payroll debit card. Prior to obtaining consent to issue wages under the proposed rule, an employer is required to provide the following information:

  1. A description of all the employee’s options for receiving wages (i.e. direct deposit, cash, check);
  2. A statement that the employer may not require the employee to accept wages by payroll debit card or by direct deposit;
  3. A statement that the employee may not be charged any fees for services that are necessary to access the employee’s wages in full; and
  4. A list of locations where employees can access and withdraw wages at no charge to the employee within reasonable proximity to their place of residence and place of work.

Further, the employer is required to ensure there exists at least one network of ATMs that offers debit card withdrawals at no extra cost; at least one method to withdraw up to the total amount of wages for each pay period or balance remaining on the payroll debit card without incurring a fee; and the provision of bank statements with information regarding transaction history of the account per an employee written or oral request.  The rule also requires wages to be received by the employee free of any charge.

The new proposed rule will take effect after a 45 day public commenting period. The provision of the proposed rule is consistent with recommendations from Attorney General Eric T. Schneiderman, explained in our update of July 10, 2014, which can be accessed at http://putneylaw.com/cu_071014.html.

If you have any questions concerning payroll debit cards or other methods of payment of employee wages, please do not hesitate to contact us.