NY paycard regulation further strengthens protections for workers

New York Governor Cuomo enacted on September 8 the country’s most comprehensive payroll card protections for low-wage workers. An estimated 13,000 businesses in New York State pay approximately 200,000 workers through debit cards that often feature hidden fees for accessing cash or checking balances. Many of the workers paid with these cards do not have a bank account, forcing them to use ATMs that require additional fees on top of those already imposed by the card issuer. In order to combat these practices, the new regulations will:

• Require that employees have access to at least one fee-less ATM near where they live or work. Employers who use payroll cards that provide access to wages are responsible for guaranteeing access;

• Mandate unlimited free withdrawals from a fee-less ATM;

• Prevent employers from passing on costs associated with a payroll debit card account to an employee and prohibit employers from receiving a kickback or other financial remuneration from the issuer, card sponsor, or any third party for delivering wages by payroll card; and

• Eliminate fees, including those for customer service, startup or maintenance, overdraft, inactivity, balance inquiries and account closing, among others.

The new regulations govern all methods of wage payment: cash, paycheck, direct deposit or pay card. The new payroll regulations protect workers who receive paychecks by codifying the existing requirement that employers provide a local, no-cost way for employees to cash their checks. (New York Department of Labor Regulations, September 8, 2016.)

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