Recently enacted legislation (SB 211) gives employers the option to pay employee wages by payroll debit card, provided employees give their consent. Prior to the law change, debit cards were not allowed as a wage payment method. (Public Act 16-125, signed by the governor on June 7, 2016.)

Effective October 1, 2016, employers may pay employees by payroll debit card as long as:

1. Each employee has the option of instead receiving wages by direct deposit or paper check, and an employee that has elected to be paid by payroll debit card must be allowed to change the method of payment back to direct deposit or check, with payment by the new method to occur within 14 days of the employee's request.

2. The employee has in writing or electronically voluntarily authorized the payment of wages by payroll debit card without intimidation, coercion or fear of discharge or reprisal from the employer. The payment of wages by payroll debit card cannot be made a condition of employment or a condition for the receipt of benefits or other form of remuneration.

3. The employer must provide to employees prior to an election to pay by payroll debit card written notice that states that receipt of wages by payroll debit card is voluntary; the terms and conditions relating to use of the payroll debit card, including an itemized list of fees that may be assessed by the card issuer, including the amounts; and the methods available to employees for accessing their full wages without transaction fee and how to avoid or minimize other fees charged for use of the payroll debit card.

The employer must also tell employees with the methods available to them for verifying their debit card balance without cost and advise them that third parties may assess additional fees.

The employee must be allowed to make at least three cost-free withdrawals each week from the payroll card account, one of which permits withdrawal of the full amount of the employee's net wages for the pay period at a depository financial institution or other convenient location. None of the employer's costs associated with paying wages using a payroll debit card or establishing the payroll card account can be deducted from or charged against the wages of the employee.

Regardless of how the fee is labeled, the employer and the payroll card issuer cannot change employees for:

— Issuing the initial payroll card
— Transferring wages, salary or other compensation from the employer to the payroll card account
— Maintaining a payroll card account
— Providing one replacement card per calendar year upon the employee's request
— Closing the payroll card account
— Maintaining a low balance
— Inactivity or dormancy of the payroll card account for the first twelve months of inactivity or dormancy
— Point-of-sale transactions.

Employers must provide employees with a no-cost means of confirming their payroll card account balance 24 hours per day and seven days per week through an automated telephone system, automated teller machine or electronically.

Employers are required to provide itemized information each payday to employees paid by payroll debit card, detailing the hours worked, gross earnings, deductions and net earnings (i.e., a pay stub).

The bill also allows employers the option of providing this information (whether the employee is paid by paper check, direct deposit or payroll debit card) by electronic means with the employee's consent.

Other limitations and requirements apply. For more information, see the bill language.

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