Debit Card and Direct Deposit Regulations Revoked

The New York State Department of Labor’s (NYSDOL) new regulations on paying employees via debit cards or direct deposit were set to take effect on March 7, 2017. Last week, the New York Industrial Board of Appeals (NYIBA) revoked those regulations, explaining that they were invalid because the NYSDOL attempted to place restrictions on financial institutions; this power is delegated to the New York Department of Financial Services, and therefore the NYSDOL overstepped its authority in creating such restrictions.

The new regulations had required that employers provide notice and obtain consent for employees who elected to receive wages via debit card or direct deposit, along with imposing restrictions on how the debit cards are used and the debit card fees.

What does this mean for employers now?

For now, employers with employees in New York State no longer need to prepare to comply with the new regulations. An appeal could follow the NYIBA’s decision, so at some point in the future the proposed regulations – or a version of them – could become law. In the meantime, employers need to ensure they are still complying with current regulations regarding debit card and direct deposit payments to employees.

GTM will continure to monitor this issue and provide updates as necessary. Please contact us for more information.