Use of Payroll Cards
On November 4, 2016, Pennsylvania Governor Tom Wolf signed legislation (S.B. 1265) governing the use of payroll cards by employers for payment of wages.
Pursuant to the bill, when an employer pays wages by payroll card, the employer must provide employees with a written or electronic statement of earnings and deductions each pay period in accordance with applicable law.
In addition, the following provisions apply when payment of wages, salaries, commissions, or other compensation is made through transfers to a payroll card account:
- The employee must be issued a payroll card in accordance with 12 CFR Part 1005 (relating to electronic fund transfers (Regulation E)).
- The payroll card account must be established at a financial institution whose funds are insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration.
- No employer may make the payment of wages, salary, commissions, or other compensation by means of a payroll card account a condition of employment or a condition for the receipt of any benefit for any employee.
- Prior to obtaining an employee’s authorization, the employer must provide the employee with clear and conspicuous notice, in writing or electronically, of all of the following:
- All of the employee’s wage payment options.
- The terms and conditions of the payroll card account option, including the fees that may be deducted.
- A notice that third parties may assess fees in addition to the fees assessed by the card issuer.
- The methods available to the employee for accessing wages without fees.
- The payroll card account must provide the employee with the ability, without charge, to make:
- At least one withdrawal each pay period.
- One in-network ATM withdrawal each pay period.
- The payroll card account must provide the employee with a means of ascertaining the balance in the employee’s payroll card account through an automated telephone system or other electronic means without cost to the employee.
- An employer may not use a payroll card account that charges fees to the employee for any of the following:
- The application, initiation, or privilege of participating in the payroll card program.
- The issuance of the initial payroll card.
- The issuance of one replacement card per calendar year upon request of the employee.
- The transfer of wages, salary, commissions, or other compensation from the employer to the payroll card account.
- Purchase transactions at the point of sale.
- Nonuse or inactivity in a payroll card account consisting of the failure to withdraw funds from an account, deposit funds into an account, transfer funds to another person, or use an account for purchase transactions, if the nonuse or inactivity is less than 12 months in duration.
- The funds in a payroll card account may not expire.
- The employer must honor an employee’s written or electronic request to change the employee’s method of receiving wages from a payroll card account to direct deposit or negotiable check. The change will take effect as soon as practicable, but no later than the first payday after 14 days from receipt by the employer of the employee’s request and any information necessary to implement the change.
- Nothing in this section may be construed to pre-empt or override the terms of any collective-bargaining agreement with respect to the methods by which an employer provides payment of wages, salary, commissions, or other compensation to employees.
The law goes into effect on May 3, 2017
Read PA S.B. 1265