Today we're discussing payroll cards which allow you to load employee pay onto cards rather than depositing it to a bank or issuing a check, the employee uses the card much like a debit card to make purchases, pay bills, or even access cash at ATMs.
This is covering timely and trending topics and HR n benefits brought to you by the experts at HR 360, payroll cards can be convenient for both you and your employees, particularly those who don't maintain bank accounts, however, these cards are subject to a number of requirements under the law, the federal Consumer Financial Protection Bureau offers the following guidance.
First, under federal law, an employer can't require an employee to receive his or her wages on a payroll card, you must offer at least one other alternative, such as direct deposit or a paper check, permissible wage payment methods are governed by state law, so check your state's requirements.
Second, the law protects employees with several stipulations, for example, payroll card holders are entitled to receive clear disclosures of fees in writing and in a form they can keep, cardholders must also have access to account balances and histories, including information on any fees imposed for fund transfers, also card holders have error resolution rights, the issuing bank or institution must respond to all error reports if they are made in a timely fashion.
Finally, any employer who uses payroll cards must still comply with employee pay laws. For example, in some cases, the fees imposed by payroll cards could reduce hourly, employees pay below the minimum wage, this could lead to potential penalties under the Federal Fair Labor Standards Act and state minimum wage laws, also certain states may regulate or prohibit the use of payroll cards.
So contact your State Labor Department for more information to learn more about our subscription options to our HR library with over 500 downloadable forms and policies, including detailed information on employee pay.