Pennsylvania Now Permits Payment of Wages Using Payroll Cards

December 1, 2016Alerts Labor & Employment Alert

Pennsylvania now permits the payment of wages, salary, commissions and other compensation utilizing payroll cards provided that an employee consents in writing and with stringent employee protections. Here is a rundown of the conditions required by the statute.

When an employer pays wages by payroll card, the employee must be provided with a written or electronic statement of the earnings and deductions for each pay period. In addition, the employee must be issued a payroll card in accordance with federal law and without any fee. The payroll card account must be established at a financial institution where funds are insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA). An employer cannot mandate that the employee consent to payment using a payroll card.

Before obtaining an employee’s authorization, the employer must provide the employee with clear and conspicuous notice (in writing or electronically) of all of the following:

  • All of the employee’s wage payment options;
  • The terms and conditions of the payroll card account option including any fees that may be deducted;
  • A notice that third parties may assess fees in addition to the fees assessed by the card issuer; and
  • The methods available to the employee for accessing wages without fees.

The payroll card account must provide the employee with the ability without charge to make at least one withdrawal each pay period, one in-network ATM withdrawal each pay period and means of ascertaining the balance on the payroll card account through an automated telephone system or other electronic means.

The payroll card account must not charge fees to the employee for:

  • The application, initiation or privilege of participating in the payroll card program;
  • The issuance of the initial payroll card;
  • The issuance of one replacement card per calendar year upon request of the employee;
  • A transfer of wages from the employer to the payroll card account;
  • Purchase transactions at the point of sale; and
  • Nonuse or inactivity in a payroll card account resulting from the failure to withdraw funds from an account, deposit funds into an account, transfer funds to another person or use an account for purchase transactions if nonuse or activity is less than 12 months in duration.

The funds in a payroll card account may not expire. The employer must honor an employee’s written or electronic request to change the employee’s method of receiving wages from a payroll card account to direct deposit or negotiable check and this change must take effect as soon as practicable but no later than the first payday after 14 days from the receipt of the request and any information necessary to implement the change.

This method of payment will be useful to some employers provided that these statutory requirements are met.

For more information about this alert, please contact Steven K. Ludwig at 215.299.2164 or sludwig@foxrothschild.com or any member of the firm’s Labor & Employment Department