New York Payroll Card and Direct Deposit Regulations

UPDATE: On February 16, 2017, the New York Industrial Board of Relations revoked this law. Employers, for now, do not need to comply with the new regulations. However, they still must abide by current laws regarding debit card and direct deposit payments to employees. 

In September of 2016, the New York Department of Labor adopted final rules which regulate wage payment methods in the state. These rules take effect on March 7, 2017. Employers who pay wages by any method other than cash or check, including direct deposit and payroll cards, must adhere to these New York payroll card and direct deposit regulations.

The first requirement for affected employers is to get the employee’s consent to receive wages by a method other than cash or check, such as payroll cards or direct deposit. In order to obtain consent from employees, a notice and consent form must be distributed to all affected employees. This notice and form must include:

• a clear description of all options for employees to receive wages;
• a statement that employees cannot be required by their employer to be paid by payroll card or direct deposit;
• a statement that the employee cannot be charged any fees for necessary services in order for the employee to receive his/her wages in full; and
• if payroll cards are offered as an option, a list of ATMs that do not charge fees and are within a reasonable travel distance from the employee’s workplace or residence must be provided.

Employee consent must be obtained without any kind of pressure from the employer to be paid by payroll card or direct deposit, and employers may not base continued employment on whether or not an employee consented to be paid in such a manner.

Employees must be able to view and print the notice and consent from their workplace without any cost. The notice and consent must be available in both English and the employee’s primary language, if applicable. Download the payroll card consent form here, and the direct deposit consent form here.

Once an employer distributes the notice and obtains consent, in order to pay wages via a payroll card they must:

• Wait seven business days before paying the employee’s wages by payroll debit card, after they have given consent;
• Ensure the total amount of wages for each pay period or the balance remaining on the payroll debit card is available for the employee to withdraw without any fees;
• Provide written notice of any changes in the payroll card terms and conditions at least 30 days before they take effect.

For employers who pay employees via direct deposit, they must maintain a copy of the employee’s consent throughout the employee’s tenure and for six years after the employee’s final direct deposit payment. Also, employees must be provided with a copy of their written direct deposit consent and employers must ensure the direct deposits are made to the financial institution selected by the employee.

Again, these new regulations take effect on March 7, 2017, and they apply to all employees who work in New York State except those who are overtime-exempt under the new rule published last December (executive and administrative employees who are over the minimum salary requirement). Employers should also check with their payroll card vendors to make sure their contracts are compliant with the new regulations.

For more information, contact us at (518) 373-4111.