September 2016
For Everything Else There is MasterCard...

Time for all New York State employers to review their policies as to how employees are paid.

New York State's Department of Labor has just adopted final rules on how, as of March 7, 2017, employers in New York State may AND MAY NOT pay their employees. The new regulations place significant requirements on employers who pay their employees using direct deposit or debit cards. Other than employees who are employed either on a farm or within the meaning of the law as an executive, administrative, or professional employee AND earn at least $900/week, all employees who work in New York State are covered by the regulation, including employees already employed as of March 7, 2017.
Essentially, the new regulations focus on employee consent and facility of obtaining pay. If you pay your employees by using either direct deposit or debit card, you cannot require the employees to get their wages that way. In addition, written notice and consent must first be given to and obtained from your employees if you want to pay them by direct deposit or debit card. The notice must meet the regulations' demand that the notice tell employees, among other things, in "plain language" what options they have for receiving wages, such as check, direct deposit or debit card. The notice must also expressly state that employees cannot be charged for fees for services in order to access pay and provide a list of locations that are in reasonable proximity to the place of employment or employee's residence and in the case of pay by debit card, at which the employee can get his/her pay without any charge. Not only must the notice contain certain language, it must be in a certain language - in English AND the employee's primary language (if the New York State Department of Labor has created a sample notice and consent form in that language, like it has done for the Wage Theft Prevention Act notice requirement in Spanish, Chinese, Korean, Polish, Creole Russian, French, Urdu, Arabic, etc.). The New York State DOL may issue a template for this notice. A copy of the employee's signed written consent must be provided to the employee.  

The good news here is that although notices must be provided to employees who are already receiving their pay by direct deposit, employers are not required to obtain new direct deposit authorizations. However, if notices are not distributed to these employees those previously executed authorizations will be void.

If you pay by debit card, the requirements are even stiffer. Apart from the foregoing requirements, other hurdles must be met, including waiting 7 business days from receipt before allowing the consent to take effect, providing access to an ATM located no more than a reasonable travel distance from home or work and that allows withdrawals without cost, provide at least one method to withdraw up to the total amount of wages each pay period or the debit card balance without a fee being charged, and ensure that the debit card funds never expire. No fees may be passed along to employees in connection with the card, including charges for ordering replacement cards or declined transaction fees. The regulations include a long list of prohibited fees. The use of these cards for pay have additional limitations as well, such as requiring unionized employers whose collective bargaining agreements contain provisions on the method(s) of pay to obtain union consent before paying by debit card.

Even if you follow all of these proscriptions, you are still not safe from being in violating of the new regulations. They impose new recordkeeping requirements relating to making sure employees can access and print the notice forms and that employers keep copies of both the notice and consent forms for six years after the last payment of wages by debit card or direct deposit.

March 7, 2017 is not so very far away and you can bet that the New York State Department of Labor will focus on this issue during routine audits and may receive significant numbers of complaints from employees for violations of the regulations. Therefore, it is not too soon to make sure that your policies and procedures are fully compliant with the regulations' new requirements. Notice and consent forms must be prepared. Authorizations obtained from both new and old employees. Payments by direct deposit or debit cards may have to be stopped if these steps are not taken. Review debit card contracts to ensure compliance and educate managers and payroll personnel about these new regulations.

Please visit the Employment Law page of our website for past issues of EMPLOYMENT ALERT NEWSLETTER to get information on other important topics.  

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