On June 7, 2016, Connecticut Governor Dannel Malloy signed Bill S. 211 making payroll cards an approved form of wage payment. Under An Act Allowing Employers to Pay Wages Using Payroll Cards, “payroll card” is defined as a stored value card or other device used by an employee to access wages from a payroll card account and that is redeemable at the employee’s election at multiple unaffiliated merchants or service providers, bank branches or automated teller machines. “Payroll card account” is defined as an account in any bank, Connecticut credit union or federal credit union that is directly or indirectly established through an employer to which transfers of the employee’s wages, salary or other compensation are made and accessed through the use of a payroll card.
Employees that accept payroll cards as a form of wage payment must provide a written or electronic authorization stating they voluntarily accept the form of wage payment. Under the law, employers are prohibited from requiring employees to accept wage payment through payroll cards. Employees will be given the option to receive wages, salary or other compensation by either direct deposit or by negotiable check.
Before employees choose to receive wages, salary or other compensation via a payroll card, an employer must provide a conspicuous notice that includes the following information:
- Payment of wages by means of a payroll card account is voluntary.
- Terms and conditions for using payroll card.
- Methods available for accessing their full wages, salary or other compensation. Employees are allowed to make at least three withdrawals each week from the payroll card account without a fee. One of the withdrawals must allow an individual to withdraw the full amount of the wages, salary or other compensation.
- Methods for checking balance in payroll card account. Employees must be able to check their payroll card account balance, free of charge, 24 hours per day by an automated phone system, teller machine, or electronically.
- Employer’s fees associated with using payroll card accounts cannot be transferred to employees. No fees may be imposed for issuing the initial payroll card, transferring funds from employer to payroll card account, maintaining a payroll card account, providing one replacement card per year, closing the payroll card account, having a low balance and inactivity, or point-of-sale transactions.
- Payroll card or payroll card account cannot be linked to any form of credit.
- Payroll cards may have an expiration date. A replacement must be provided before the expiration date, and funds in the account cannot expire.
Covered employers must review An Act Allowing Employers to Pay Wages Using Payroll Card to make sure they understand their obligations. The new law becomes effective October 1, 2016.