New York Introduces More Payroll Card Legislation

Stephen T. Middlebrook & Tom Kierner

While it’s still the dead of winter and many beasts are deep in hibernation, state lawmakers are awakening and starting to introduce new legislation.  Even those legislatures that aren’t officially in session yet are showing signs of life with the prefiling of bills.  While bills that were languishing in committee at the end of 2018 are dead, do not be sad, for we expect a flurry of new and recycled initiatives in the coming months.

Kicking off the 2019 “Let’s regulate payroll cards some more” season is New York with Assembly Bill 88 (“AB 88”), which would amend New York law to authorize payment of wages to payroll cards if certain requirements are met regarding employee choice and consent, wage and fund access, and delivery of a statement of deductions.

AB 88 would place the following obligations on employers paying wages via payroll cards:

  1. Employers must obtain an employee’s consent prior to paying the employee via payroll card. The consent must be obtained without intimidation, coercion, or fear of discharge and may not be a condition of employment.
  2. Employees must be permitted to withdraw, once per pay period, their wages in full without any fee and without difficulty.
  3. Employers must honor an employee’s revocation of consent or request to switch to direct deposit if timely notice is provided.
  4. Employers must furnish statements of deductions for each pay period.
  5. Wages deposited to the payroll card must be subject to withdrawal or other disposition by the employee to the same extent and in the same manner as if such deposit had been made directly by the employee into an account maintained in a financial institution in the name of the employee.

If any of this sounds familiar, it’s because requirements #1, #2, and #3 come from the payroll card regulations published by the New York Department of Labor in 2016  (the “Wage Payment Rule”). The proposed legislation, however, goes beyond the requirements of the NY DOL regulations.  Obligation #4 about furnishing deduction statements appears to be new in New York, but is in line with the majority of states. 

More troubling is the fifth requirement that an employee’s ability to withdraw or spend funds on a payroll card must mirror the capabilities provided by a bank account held in the name of the worker.  It’s nearly impossible to know what this is supposed to mean because accounts at financial institutions offer a wide variety of features. Is the account payroll cards are to be measured against a savings account or a checking account? Does it come with a debit card?  Does it offer bill pay services?  We’re assuming this is merely a first draft of the bill and that in the near future the latter provision will be replaced by one written with precision and clarity.  A compliance officer can dream, can’t she?

The impetus for introducing the bill is also a bit curious. The text largely echoes the core requirements in the Wage Payment Rule which is being challenged in court by Global Cash Card. Is this legislation an attempt to ensure that choice, consent, and wage access requirements are preserved in the event the NY DOL loses the case?

Perhaps, but those core requirements are not new to New York employers. Long-standing opinions of the NY DOL have established consent, choice, and wage access requirements. So, even if the Wage Payment Rule gets struck down, New York law would not suddenly turn into the wild west of wage payment.  So again, the purpose of the bill is a tad obscure.  We’re sure, however, that all will be revealed in future episodes of AB 88.

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