Effective May 3, 2017, employers in Pennsylvania may, under certain circumstances, use payroll card accounts to pay wages to employees. Previously, the Pennsylvania Superior Court, in Siciliano v. Mueller, 2016 Pa. Super. 229 (Pa. Super. 2016), held that a company that had mandated the use of payroll debit cards to pay wages to its employees violated the Pennsylvania Wage Payment and Collection Law. Accordingly, we had advised that use of payroll debit cards to pay wages was risky.
New legislation now allows the use of payroll card accounts in some situations. Under the law, payroll card accounts may only be used with authorization from the employee. The authorization may be obtained in writing or electronically, but it cannot be a condition of employment or a condition of receipt of wages. In addition, before getting the employee’s authorization, the employer must provide “clear and conspicuous notice,” either in writing or electronically, of all of the following:
all wage payment options available to the employee
the terms and conditions of the payroll card account option, including any deductions by the issuer
a notice that third parties may assess additional fees; and
the methods for accessing wages without fees
Employers also must honor an employee’s request to change his/her payroll receipt method, as long as the request is received in writing or electronically.
The new law specifies that employees must still receive a statement of earnings and deductions each pay period.
If a payroll card account is used, it must be issued in accordance with federal regulations at an institution insured by the FDIC. The account, to comply with this law, must allow the employee, without any charge, to: (1) make at least one withdrawal per pay period, or at the least weekly, for the full amount of net wages; and (2) make one in-network ATM withdrawal during the same period.
The payroll card account must allow access to balance information without charge. In addition, no fees can be charged for a variety of items, including the issuance of the payroll card, transfers of funds by the employer to the account, and for nonuse or inactivity.
The funds deposited in payroll card accounts will not expire.
What Does This Mean For You? This law provides employers with another method to pay wages. Employers who are interested in providing pay in this manner will need to be very careful to ensure they are following all of the very specific provisions of this law.
If you have any questions or concerns about this update, or any other employment or labor law questions, please contact S. Whitney Rahman at firstname.lastname@example.org or (717) 509-7237.
**This update is provided for informational purposes only and
should not be construed as legal advice or as creating an
attorney-client relationship where one does not already exist**