On September 7, 2016, the New York State Department of Labor (the “Department of Labor,” the “Department,” or the NYS DOL”) issued a regulation requiring employers in the State of New York, in order to pay wages to workers by direct deposit or by payroll debit card, to obtain the workers’ written consent.  Further, the new regulation (also referred to herein as the “new rule”) sets forth numerous other requirements which, in effect, restrict employers’ ability to pay wages by direct deposit or by debit card.  The new rule takes effect on March 7, 2017.

One effect of the new rule is to strongly encourage employers in New York State to pay wages, to their workers, by check.

The new regulation will be codified as 12 N.Y.C.R.R. Part 192.  The new rule expands the scope of N.Y. Labor Law § 192, which prohibits employers in the State of New York, without the advance written consent of (many) blue-collar workers, from directly depositing the workers’ net wages or salary in a bank or other financial institution.

Employees Protected

The new rule applies to all employees who work in New York State except for any person employed in a bona fide executive, administrative, or professional capacity who earns more than $900 per week.  In other words, the new regulation protects all employees in New York except for overtime-exempt, white collar employees who are paid annualized wages of more than $46,800 per year.

The new regulation excludes, from its scope, employees who work on a farm not connected with a factory.

‘Debit Card’ Defined

The new regulation defines a “Payroll Debit Card” as a card that provides access to an account with a financial institution established directly or indirectly by the employer, and to which transfers of the employee’s wages are made on an isolated or recurring basis.

Employers Must Give Written Notice To All Workers To Whom The Employers Pay Wages By Direct Deposit Or Debit Card

Under the new rule, employers which pay wages to their employees by direct deposit or debit card must provide the employees with highly detailed written notice.  This written notice must:

  • Describe, in plain language, all of the employee’s options for receiving wages (that is, by cash, check, direct deposit, or debit card);
  • State that the employer may not require the employee to accept wages by debit card or by direct deposit;
  • State that the employee may not be charged any fees for services that are necessary for the employee to access his or her wages in full; and
  • If the employer is offering employees the option to receive payment of wages by debit card, give a list of locations, such as automated teller machine (“ATM”) locations — which locations must be within “reasonable proximity” to the employees’ residence or workplace — where employees can access and withdraw wages at no charge to the employees.

Employers Must Get Voluntary, Written Consent Of All Employees To Whom The Employers Pay Wages By Direct Deposit Or Debit Card

The new regulation requires employers to obtain an employee’s consent in writing in order to pay wages, to the employee, by direct deposit or debit card.  An employee may revoke his or her consent at any time.  If an employee revokes his consent, then, within two pay periods, the employer must cease paying wages to the employee by direct deposit or debit card, as the case may be, and must begin (or resume) paying wages to the employee by check.

An employee’s consent to receive wages by direct deposit or debit card is valid only if the employer obtains that consent without intimidating or coercing the employee and without causing the employee to fear adverse employment action (such as firing, demotion, decrease in pay, or the like) if the employee declines to accept payment of wages by direct deposit or credit card.

Similarly, employers may not make acceptance of payment of wages by direct deposit or credit card a condition of hire or of continued employment.

No Retaliation

The new rule prohibits an employer or his agent, or the officer of any corporation, from firing, penalizing or in any other manner discriminating against any employee because that employee has not consented to receive his or her wages by direct deposit or debit card.

The new regulation does not expressly create a private cause of action by a worker against an employer for violating the new regulation’s anti-retaliation provision (or, for that matter, for violating any other provision of the new rule).  That is, the new rule does not expressly confer on an employee a cause of action, for monetary damages or equitable relief, against an employer which fires, penalizes, or otherwise discriminates against the employee because that employee refuses to accept payment of his or her wages by direct deposit or debit card.

Employees’ Prior Consents To Accept Payment Of Wages By Direct Deposit or Debit Card Remain Valid If Such Employees Are Given New Notice

An employee’s consent, given before March 7, 2017 and without the written notice required by the new rule, to accept payment of wages by direct deposit or debit card remains valid if, before March 17, 2017, the employer (i) provides the employee with the written notice required by the new rule and (ii), by that notice, expressly notifies the the employee of his or her right to revoke his or her consent to receive wages by direct deposit or debit card.

Additional Requirements For Employers To Pay Wages By Debit Card

In addition to the above-described, written notice and consent, there are additional conditions that, in order to pay wages to workers by payroll debit card, employers must satisfy.  Among other conditions:

  • The employer must provide local access to one or more ATMs that offer withdrawals at no cost to the employee;
  • The employer must provide at least one method to withdraw up to the total amount of wages for each pay period or balance remaining on the debit card without the employee incurring a fee; and
  • The agreement between the employer and the issuer of the payroll debit cards must provide that the funds on a payroll debit card shall never expire.

Take-Aways For Employers

By the March 7, 2017 effective date of the new rule, employers in New York State must modify their policies regarding method(s) of payment of wages to conform to New York’s new regulation.  More specifically, by March 7, 2017, each employer in New York should, among other things, take the following actions:

  • Review the employer’s current practices concerning method(s) of payment of wages.
  • Give, to all workers covered by the new rule to whom the employer pays wages by direct deposit or by debit card, the written notice required by the new rule.
  • Get all covered workers to whom the employer pays wages by direct deposit or debit Card voluntarily to sign consent forms authorizing such method of payment.
  • If a covered worker to whom the employer pays wages by direct deposit or debit card does not sign a consent form, cease paying wages to the worker by direct deposit or debit card, as the case may be, and pay wages to the worker by check.
  • If the employer is offering workers the option to receive payment of wages by debit card, give workers a list of locations, such as ATM locations, where workers can access and withdraw wages at no charge to the workers.  These locations must be within “reasonable proximity” to the workers’ residence or workplace.
  • Review and renegotiate the employer’s agreements with issuers of payroll debit cards so that these agreements comply with the new rule.

If your company needs assistance or guidance on a labor or employment law issue and your company is located in the New York City area, call Attorney David S. Rich at (212) 209-3972.

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