22 February 2017 New York payroll debit card regulations ruled invalid The New York Industrial Board of Appeals ruled that the regulations promulgated in September 2016 and scheduled to be effective March 7, 2017, to govern the payment of wages by electronic means (i.e., payroll debit card) are invalid because they exceed the Department of Labor's rulemaking authority. As a result, the regulations are revoked. The Board found that Labor Law Section 192 does not prohibit the payment of wages by payroll debit card with an employee's consent because the statute allows for payment by direct deposit into a bank or other financial institution. It also found that the Department's prohibitions against the fees charged for use of a payroll debit card are beyond the Department's purview and would instead fall under the state's banking laws and regulations as governed by the state Department of Financial Services. Further, the Board found that the fees associated with use of a payroll debit card are similar to fees associated with checking accounts and licensed check cashers, and, therefore, are not subject to regulation by the Department. The regulations are found to go beyond regulation of the employment relationship and into the area of banking law, which is outside Department's competence and expertise. The Department earlier this year released model templates that employers wishing to pay wages by electronic means (direct deposit or payroll debit card) could use to notify employees of these payment options and request their consent to receive their wages by direct deposit or payroll debit card. However, the templates contain provisions under the now revoked regulations. Employers are still required to have an employee's consent to pay by direct deposit or payroll debit card. Employees that refuse to be paid by either of these methods must be paid by cash or check. At the time of this Alert, the Department had not yet issued guidance regarding the revocation of the regulations or whether an appeal is planned.
Document ID: 2017-0361 | |||||||||||
