Payroll Cards 2015 Legislation

Payroll cards are designed as a alternative method of wage payment, compared to a paper check or direct deposit.

They operate similar to prepaid debit cards. An employer can load the employee’s wages directly onto a card that is issued by a financial institution. The payroll cards can be branded with the logo of the major credit card brands with like American Express, Discover, MasterCard or Visa. Payroll cards can be used to make purchases in stores or online, pay bills and access cash through ATM withdrawals, bank tellers or through convenience checks.

Payroll cards are a safe and convenient method to receive wages when compared to cash or a paper check. Payroll cards have the same protections as traditional debit cards under the Federal Reserve Board’s Regulation E. While payroll cards offer ease and convenience, questions have been raised regarding the fee structures, whether payroll card programs and employers provide clear and adequate notice of the fees, how to avoid the fees and whether employees have a choice between receiving a paper check, direct deposit or a payroll card.

Twenty-one states and Puerto Rico have enacted legislation authorizing the use of payroll cards. Legislation in 19 of those states—Arizona, Florida, Georgia, Hawaii, Illinois, Kansas, Maine, Maryland, Michigan, Minnesota, Nebraska, New Hampshire, North Dakota, Oklahoma, Oregon, Puerto Rico, Tennessee, Vermont, Virginia and West Virginia—and Puerto Rico apply to any employers while Texas and Washington enacted legislation specific to institutions of higher learning.

Payroll card-related legislation has been introduced or is pending in 12 states in the 2015 legislative session. Florida enacted legislation regulating the use of payroll cards by labor pools. Under the new law, labor pool employers must give notice prior to the first pay period if the employer intends to use a payroll card program. And, the labor pool must give the laborers a list of businesses within close proximity to the labor pool’s location where free withdrawals can be made. Georgia enacted legislation authorizing payroll cards. Kansas, in its definition of a payroll card, deleted that a payroll card must be a machine readable instrument.

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