New York recently joined the growing number of states that allow employers to pay workers with payroll debit cards. Instead of a paper check or direct deposit into a banking account, wages are placed on a payroll card for the employee to use at his leisure.
Prior to this new legislation, direct deposit was the method of payment expressly mentioned under New York State labor laws. Many employers interpreted the regulations to include payroll debit cards, even without any express language on the issue. Employers find this payment method attractive because it costs less than producing a paper check, which is often the only available payment method for the growing number of workers without a traditional bank account. But, it is a system prime for rampant abuse and problems.
The New York Attorney General’s Office previously opined that payroll debit cards were an expensive option for the employees who use them, due to high ATM costs and other fees. To counter this problem, the new legislation mandates that:
- Payment on a debit card is only allowed with voluntary consent from workers; and
- There must be at least at least one ATM network that charges no fees for access to the money.
Legislators hope that the new changes will clear up any confusion about the use of payroll debit cards and protect the interests of employees.