Frequently Asked Questions
| Question | Answer |
|---|---|
| What is a payroll debit card? | A payroll debit card is a debit card that employers can use to pay employees. An employer can pay an employee by transferring their wages onto the card. |
| Can a payroll debit card be used like a regular debit card? | Yes, like regular debit cards, they can be used to make online and in-person purchases, pay bills, and make cash withdrawals. |
| Does a new payroll debit card have to be issued to an employee each pay cycle? | No, once a payroll debit card is issued to an employee, an employer can transfer the employee’s wages to the same card each pay cycle. |
| Is a payroll debit card linked to an employee’s bank account? | No, a payroll debit card is linked to an account that an employer has established with a financial institution. |
| Can a payroll debit card be linked to any forms of credit? | No, a payroll debit card cannot be linked to any form of credit, including loans against future pay or cash advances. However, a payroll debit card issuer is not prohibited from covering occasional, inadvertent overdraft transactions, as long as there is no charge to the employee. |
| What is payment by direct deposit? | Payment by direct deposit means the transfer of an employee’s wages into an account at a financial institution selected by the employee. |
| Can an employer pay an employee by direct deposit into an account at a financial institution selected by the employer? | No, an employer paying an employee by direct deposit must make the direct deposit into an account at a financial institution selected by the employee. |
| Can an employer require their employees to be paid only by payroll debit card or direct deposit? | No, an employer cannot require that their employees are paid only by payroll debit card or direct deposit. |
| If an employee does not consent to be paid by payroll debit card or direct deposit, is the employer required to provide an alternative method of payment? | Yes. If an employee does not consent to being paid by payroll debit card or direct deposit, then the employer must pay the employee by cash or check. Employers cannot make payment by payroll debit card or direct deposit a condition of hire or a condition of continued employment. |
| What must an employer do before paying an employee using a payroll debit card or by direct deposit? | Before paying an employee using a payroll debit card or by direct deposit, an employer must provide a written notice to the employee and obtain the employee’s express, voluntary, and written consent. As part of obtaining the employee’s consent, the employer must also provide the employee with written notice of all terms and conditions of the method of payment. For payroll debit cards, the employee’s written consent must be received by the employer at least seven business days before the card is issued. |
| What needs to be included in the written notice that an employer must provide to an employee before paying them with a payroll debit card or by direct deposit? | The written notice must include: a plain language description of all the options the employee has for the method of payment of their wages; a statement that the employer cannot require the employee to be paid using a payroll debit card or by direct deposit; and a statement that the employee may not be charged any fees for services necessary to access their full wages. For payroll debit cards, the notice must also include a list of locations where the employee can access and withdraw their wages at no charge and that are within a reasonable distance from the employee’s place of residence or work. Additionally, for both payroll debit cards and direct deposit, the employer must also provide the employee with written notice of all terms and conditions of the method of payment. |
| Can the notice and consent be exchanged electronically? | The notice and consent can be exchanged electronically, as long as the employee is provided with a way to view and print both the notice and consent while at work and at no cost, and the employee is notified of this option through the electronic process. |
| In what language must the notice and consent be provided? | The written notice and consent must be provided in English and also in the primary language of the employee if the Commissioner of Labor has provided a template notice and consent in the primary language of the employee. |
| How long must an employer maintain a copy of an employee’s consent to be paid by direct deposit? | For an employee paid by direct deposit, an employer must maintain a copy of the employee’s consent during the period of the employee’s employment and for six years following the last payment of wages to the employee by direct deposit. The employer must also provide a copy of the employee’s written consent to the employee. |
| Besides the notice and consent described above, what other requirements must be met before an employer can pay an employee using a payroll debit card? | Before paying an employee using a payroll debit card, an employer must provide at least one method by which the employee can withdraw up to the full amount of their wages without a fee. The employer must also ensure that the employee has access to one or more ATMs or facilities that offer withdrawals at no cost within a reasonable distance from their work or home. |
| If an employee belongs to a union, does an employer also need union approval to pay the employee using a payroll debit card? | If an employee is covered by a valid collective bargaining agreement that expressly provides the methods by which employees may be paid, then the employer must also have union approval to pay the employee using a payroll debit card. |
| Can an employee withdraw their consent to be paid using a payroll debit card or by direct deposit? | An employee can withdraw their consent to be paid using a payroll debit card or by direct deposit at any time. Once an employee withdraws their consent, the employer has a reasonable period of time to change the method by which they pay the employee, but the period of time cannot exceed two full pay periods. |
| Does an employee have to be notified when the terms and conditions of the payroll debit card change? | Yes, an employer must notify an employee being paid by payroll debit card when the terms and conditions of the payroll debit card change. The employer must provide notice at least 30 days before the changes take effect. This notice must be written in plain language, in at least 12-point font, and in the employee’s primary language or a language the employee understands. Additionally, if the issuer charges the employee any new or increased fees before the end of the 30-day period, the employer must fully reimburse the employee. |
| Is an employee responsible for paying any fees related to the use of a payroll debit card? | An employee may not be charged any fees for services that are necessary for the employee to access their wages in full. An employer may also not charge, directly or indirectly, the employee for any of the following:
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| Can the funds on a payroll debit card expire? | No, the funds may not expire. An employer may not pay an employee using a payroll debit card unless the employer has an agreement with the card issuer ensuring that funds on the payroll debit card will not expire. The agreement may allow the issuer to close the payroll debit card account for inactivity as long as the issuer provides reasonable notice to the affected employee and as long as the issuer refunds any remaining balance to the employee within seven days. |
| May an employer receive any benefits from a payroll debit card issuer? | No, an employer may not receive any kickback or financial compensation from a payroll debit card issuer, sponsor, or any other party in exchange for offering or providing payroll debit cards as a payment method for employees. |
| Are there any employees for whom the specific requirements described in these FAQs do not apply? | The specific requirements described in these FAQs do not apply to any persons employed in a bona fide executive, administrative, or professional capacity whose earnings are in excess of $1,300 a week, nor to persons working on a farm not connected with a factory. They also do not apply to any person who has entered into a contract to play baseball at the minor league level and who is compensated pursuant to the terms of a collective bargaining agreement that expressly provides for the wages, hours of work, and working conditions of employees. |
| What should an employee do if they believe their employer has violated a law or regulation related to payroll debit cards, direct deposit, or any other method of payment? | If an employee believes their employer has violated a law or regulation related to payroll debit cards, direct deposit, or another method of payment, they can file a complaint with the Department of Labor. |