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Rules changes proposed for payroll debit cards

Changes could be coming soon statewide for payroll debit cards, which some employers use to pay low-income workers who do not have bank accounts.

The state Department of Labor estimates 13,000 businesses in the state use the cards to pay about 200,000 workers. Employers refill the cards each payday period, and the employees then withdraw the money. The department is gathering comments on proposed rules changes that are designed to help workers avoid fees they can rack up accessing their pay or making balance inquiries.

Under one of the changes, employers would have to obtain workers’ written consent in order to pay workers via payroll cards. Employers would also need to ensure workers who use the cards have a way to access their pay without incurring fees, such as an ATM network that would not charge them a fee.

Advocates of the changes say the cards currently contain too many fees that eat away at what workers earn on a weekly basis.

“These rules would eliminate a lot of fees that nickel and dime workers out of hard-earned wages,” said Marshall Betram, outreach coordinator for the Western New York Council on Occupational Safety and Health’s Worker Center project.

The financial services industry has defended the cards as a useful alternative to workers who pay exorbitant fees at some check-cashing establishments. The industry also says the cards reduce expenses for employers, compared to the cost of issuing paper checks.

When the draft regulations were announced in May, the Labor Department said payroll debit cards had not been as regulated as other payment methods like cash, check and direct deposit.

The Labor Department’s public comment period ends Friday. Comments can be emailed to regulations@labor.ny.gov.

email: mglynn@buffnews.com