New York Attorney General Eric T. Schneiderman has found two sponsors for a pill to regulate payroll cards in the state, he announced this week.
“Attorney General Eric T. Schneiderman today announced that Assembly Majority Leader Joseph Morelle and Senator Patrick Gallivan will sponsor the Attorney General’s program bill regulating the use of payroll cards to increase protections for workers, clarify ambiguities in the law, and ensure that payroll cards offer a convenient and beneficial method for workers to access their pay. Several Rochester area labor and community organizations also announced their support for the bill, including the Rochester & Genesee Valley Area Labor Federation, the Rochester Building & Construction Trades, the Rochester Legal Aid Society, Metro Justice, the Worker Justice Center of New York, and Empire Justice. The Attorney General’s Payroll Card Act requires clear disclosure of payroll card fees, and restricts certain fees. The legislation was first proposed last year, following recommendations made in a report released by the Attorney General’s Labor Bureau.”
Payroll cards have come under fire over the past 18 months following lawsuits by workers and mistakes by fast food managers. The question is whether or not the problem truly lies with the payroll card or the employers using them.
Most payroll law operates on the principle that an employer cannot compel workers to accept wages in a way that costs the worker money. This makes sense and is an outgrowth of the bad days of company towns, where everything went back to the employer in one way or another.
In his press release, the Attorney General says the employees were often given insufficient information about how to get wages without a fee and that workers were steered or forced to receive wages on a payroll card. These kinds of problems are human resource issues with the employer, not a payroll card provider. A new hire sitting with a middle manager may be told by that manager that all new hires are required to use a payroll card. That is not the fault of the payroll provider, and won’t be solved by additional regulations on the industry.
This legislation proposed legislation comes at a time when the Consumer Financial Protection Bureau is considering regulations at the Federal level that will likely address many of the concerns raise in New York. The problem is that a patchwork of laws may lead to some people who cannot get bank accounts to be left with no other option than high cost check cashers.
Overview by Ben Jackson, Director, Prepaid Advisory service at Mercator Advisory Group
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