Regulation is always a top-of-mind issue for HR executives, and those in charge of business paycard programs are aware that the rules governing those programs are under debate across the nation. Currently, employers have legal approval to stop issuing paper paychecks in at least twenty states if they offer employees the choice of direct deposit and paycards.[1] Regulators in almost all of the remaining states also recognize paycards as a viable payment option for businesses.
As more states recognize the important role that paycards can play in giving employees access to their wages, state-level legislative bodies are taking action to pass statutes that clarify the legal recognition of paycards. A lack of clear legislation can inhibit an employer’s ability to offer its employees the option of using paycards to receive their wages. For example, the regulatory body in Connecticut does not currently recognize paycards without statutory authority and is the only state[2] (Rhode Island recently passed a law allowing paycards) where the Department of Labor has questioned the lawfulness of paycards.[3]
In 2015, paycard bills were presented to legislatures in 10 states, including Colorado, Connecticut, Florida, Georgia, Iowa, Massachusetts, Minnesota, New York, Rhode Island and Washington. The bills presented are at various stages of progress, from being debated to awaiting signature by their respective governing bodies.[4]
Below is a snapshot of paycard legislation for 2015:
Rhode Island – Payroll cards are now considered a permissible means of wage payment. A new law passed on July 15, 2015 established a range of protective measures to safeguard employees who will use this method of wage payment. [5]
Connecticut – Paycards are considered unlawful without statutory recognition in this east coast state. A bill is currently moving through the state’s legislature.[6]
Florida, Georgia and Minnesota – The Florida bill will allow labor pools to pay day-laborers using paycards[7], while the Georgia bill will apply to all employers[8].
A Minnesota bill that focused on requiring employers to use an electronic wage payment solution missed the legislative deadline[9].
Colorado and Washington – Each state’s bill, which did not pass, would have required employers to offer paper checks along with paycards and direct deposit[10].
Iowa – No additional paycard legislation was passed before the end of the legislative session in May, but discussions about adding paycard language to another bill continue[11].
Massachusetts – Two paycard bills, which are still awaiting action, would give employees access to their full wages free of extra charges and any potential fees would require notification[12].
New York – The attorney general introduced a bill that many perceived as restrictive. The state Department of Labor has added paycards as a topic of discussion for its 2015 regulatory agenda[13].
With paycard legislation continuing to be debated, regulations will continue to evolve across the country. To stay informed on the latest state-by-state paycard legislative updates, keep an eye on ADP Compliance Insights. Click here for more information about alternative forms of payment that businesses are turning to, including ADP’s electronic payment solutions.