New York Appeals Board Revokes Payroll Debit Card Regulations
On February 16, 2017, the New York State Industrial Board of Appeals (the Board) revoked the payroll debit card and direct deposit regulations that were adopted by the New York Department of Labor (NYDOL). These regulations were to become effective March 7, 2017.
As noted in an earlier Eye on Washington, final rules governing payroll cards and direct deposit were issued on September 7, 2016. The rules defined requirements for payroll cards, including fees and other restrictions, and notice and consent requirements. For example, a payroll card program was required to provide local access to at least one automated teller machine (ATM) within a reasonable distance of the employee’s work or home that offers withdrawals at no cost to the employee. The rules provided that employees must receive disclosure notices (in English and their primary language) to convey all their payment options and state that they were not required to accept wages by payroll card or direct deposit; and that they may not be charged any fees for services that are necessary to access wages. Such cards were also required to provide a way to withdraw up to the total amount of wages for each pay period, or the balance remaining on the payroll card, without a fee, and could not be linked to any form of credit, including a loan or advance against future pay.
The Board determined that the final regulations were invalid because the NYDOL exceeded their authority; for example, by restricting permissible banking fees, an area generally reserved for the state Department of Financial Services. The Board also noted that there were nine legislative bills in the New York Legislature in recent years, which were not enacted. The Board determined that New York State labor laws already permit employers to pay employees by payroll card.
Impact to New York Employers
Employers are not required to comply with the now-revoked regulations. For example, one of the provisions would have required employers to provide a list of locations where employees can access their wages at no charge within reasonable proximity to their residence or worksite. There was also a mandatory seven-day waiting period after receiving an employee’s consent to receive wages by payroll card, during which employers would have had to issue paper paychecks.
The NYDOL has 60 days to appeal the Board’s decision. In any event, additional legislation and/or rulemaking is expected on this topic.
For a copy of the Board’s ruling, go to http://industrialappeals.ny.gov/decisions/pdf/pr-16-120.pdf
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Updated on February 28, 2017
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