New York’s Regulatory Overhaul Limiting Wage Payment via Paycard & Direct Deposit Halted
On September 7, 2016, the New York State Department of Labor (NYSDOL) approved new wage payment regulations that would require New York employers to satisfy stringent notice requirements and obtain employee consent before paying wages by direct deposit or debit card.
The regulations ban debit card (pay card) companies from collecting fees from employees using the card, and make the setup process more stringent for both employers and pay card companies.
While the regulations were approved to go into effect starting March 7, 2017, the New York Industrial Board of Appeals ruled that the NYSDOL overreached in their rulemaking authority by attempting to place restrictions on financial institutions and significantly straying from the plain language of the applicable statutes allowing their authority on February 16, 2017.
The Board declared the regulations invalid and revoked the previously approved wage payment regulations. The commissioner of labor has 60 days to appeal the decision to a court.
In the case that the regulations are instituted following an appeal, we’ve detailed the regulations below.
Employers Must Provide Written Notice of Wage Payment Options
Once the regulations take effect, employers must provide written notice of wage payment options to new hires. The notice must entail the following:
- Describes in “plain language” the employee’s options for receiving wages
- States the employer cannot compel or require them to accept payments by payroll card or direct deposit
- States that no fees can be charged for services that are necessary for the employee to access their wages in full
- Provides a list of locations (that must be in “reasonable proximity” to the workplace or residence of the employee) where the employee can access and withdraw said wages at no charge
Employee Consent Must be Obtained
Employers must obtain an employee’s written consent prior to issuing wages by direct deposit or debit card. The consent notice must include the admission that the employee is free to withdraw their consent at any time, and if they choose to do so, the employer has a maximum of two weeks to stop paying the employee by direct deposit or debit card, and switch over to paying by check.
Additionally, the regulation bars employer intimidation, coercion, or threats (such as suspension, termination, loss of shifts, etc.) to force the employee to accept or decline the payment of wages by direct deposit or debit card. A copy of the consent must be given to the employee. The employers keep a copy for six years following the last date of wage payment by direct deposit or debit card.
Additional Requirements When Paycards Are Offered as a Payment Option
In addition to complying with all the criteria listed above, employers who offer debit cards for wage payment must also:
- Wait seven business days from the date of obtaining the employee’s written consent to issue wage payments by debit card
- Provide a list of locations (that must be in “reasonable proximity” to the workplace or residence of the employee) where the employee can access and withdraw said wages at no charge
- Ensure the funds on the debit card never expire
- Provide at least one method to withdraw up to the total amount of wages for each pay period, or the balance remaining on the payroll debit card, without the employee incurring a fee
These requirements will not affect the employees on your payroll who currently receive wages via direct deposit. However, they must receive the notice forms in English and their primary language. The NYSDOL has stated that it will prepare sample notices in several languages, including Spanish, Chinese, Haitian Creole, Korean, Polish, Russian, French, Arabic, Bengali, Tagalog, and Urdu.
The benefits of Fingercheck360
Employers who use FingerCheck360 can rest assured that our platform takes care of providing employees written consent of their payment options, and also collects written consent from them. A copy of their consent will be emailed to them. Regarding the additional requirements for paycards, Sole Financial, our paycard partner, is already updating to adjust for the new requirements, and will be in full compliance by the start date of March 7th. If you would like to create your own notice and written consent documents, the NYSDOL will release a model template. We will include a link as soon as one has been released.
Regarding the additional requirements for paycards, Sole Financial, our paycard partner, is already updating to adjust for the new requirements, and will be in full compliance by the start date of March 7th. If you would like to create your own notice and written consent documents, the NYSDOL will release a model template. We will include a link as soon as one has been released.
FingerCheck recommends you identify the location of local ATMs in order to prepare for the new regulations, and all other necessary measures to ensure full compliance.