The APA Visa Paycard Portal provides employers with valuable resources relating to permissible methods of wage payment and focuses on the legal requirements governing paycards. The Paycard Portal provides employers with important information on how to integrate paycards into their wage payment programs, and keeps them up to date on this rapidly developing area of the law. For individual federal and state statutes, use the box below to filter articles by federal or a specific state.
Continue on for additional discussion of issues regarding payroll cards.
The material provided on the APA Visa Paycard Portal is for informational purposes only and is not to be considered tax, legal, or financial advice, analysis, or opinion. Readers are reminded that they are solely responsible for complying with federal and state employment laws and are encouraged to seek competent legal authority before taking action based on this material.
General Counsel Opinion No. 8: Insurability of Funds Underlying Stored Value Cards
(published November 13, 2008)
Affirms that funds underlying stored value products (including payroll cards) are considered insurable deposits if they have been placed at an insured depository institution. The holder of the account (e.g., the employee) will be treated as the owner of the funds if the FDIC's standard requirements for pass through insurance are satisfied. Otherwise, the account holder will be deemed the owner.
Title 12: Banks and Banking Part 205 - Electronic Fund Transfers (Regulation E) Authority. The regulation in this part, known as Regulation E, is issued by the Board of Governors of the Federal Reserve System pursuant to the Electronic Fund Transfer Act (15 U.S.C. 1693 et seq.). The information-collection requirements have been approved by the Office of Management and Budget under 44 U.S.C. 3501 et seq. and have been assigned OMB No. 7100-0200. Purpose. This part carries out the purposes of the Electronic Fund Transfer Act, which establishes the basic rights, liabilities, and responsibilities of consumers who use electronic fund transfer services and of financial institutions that offer these services. The primary objective of the act and this part is the protection of individual consumers engaging in electronic fund transfers.- 12/12/2012
Board of Governors of the Federal Reserve System Dated August 24, 2006 Electronic Fund Transfers, Final Rule The Board is amending Regulation E, which implements the Electronic Fund Transfer Act, and the official staff commentary to the regulation, which interprets the requirements of Regulation E. The final rule provides that Regulation E covers payroll card accounts that are established directly or indirectly through an employer, and to which transfers of the consumer's salary, wages, or other employee compensation are made on a recurring basis. The final rule also provides financial institutions with an alternative to providing periodic statements for payroll card accounts if they make account information available to consumers by specified means. This final rule is effective July 1, 2007. The Board is amending Regulation E, which implements the Electronic Fund Transfer Act, and the official staff commentary to the regulation, which interprets the requirements of Regulation E. The final rule provides that Regulation E covers payroll card accounts that are established directly or indirectly through an employer, and to which transfers of the consumer's salary, wages, or other employee compensation are made on a recurring basis. The final rule also provides financial institutions with an alternative to providing periodic statements for payroll card accounts if they make account information available to consumers by specified means. This final rule is effective July 1, 2007.- 12/12/2012
OCC Advisory Letter AL 2004-6 Concerning Payroll Card Systems This advisory is in response to inquiries that the OCC has received from bankers and examiners regarding supervisory expectations for payroll card systems. Increasing numbers of national banks are offering payroll cards and other pre-paid payment services. The OCC has found that such activities are part of the business of banking. General background information on this new product, which can be particularly useful for serving persons without bank accounts, can be found in an analysis prepared by the OCC Community Affairs Department.- 12/12/2012
Opinion Letter No. 2008.07.07 The DLSE takes the position that payroll cards (at least the ones under review) involve both the direct deposit of wages and a means of accessing those wages using an electronic card. Accordingly, the program must satisfy the requirements set forth in Labor Code section 213(d) for direct deposit including the requirement that the employee participation be voluntary. In addition, the program must satisfy the requirements for payment using an acknowledgement of indebtedness under section 212(a) such as the requirement that wages be payable in cash on demand, without discount, at an established place of business in the state. According to the DLSE, one transaction each pay period without fees each pay period satisfied the requirement that wages be payable on demand without discount.- 12/31/2011
SB 120 (Ch. 56 2008)
Effective August 2008
Amends section 8-4-102 of the Colorado Revised Statutes, and provides that an employer may deposit wages on a paycard so long as the employee (1) is provided a free means of access to the entire amount of net pay at least once per pay period, or (2) may choose to be paid using another authorized method of wage payment (e.g., cash, checks or direct deposit).
Adopts Regulations on Payroll Debit Cards
Effective June 14, 2004
The Delaware Department of Labor has adopted regulations regarding payroll debit cards. The regulations allow employers to compensate their employees using payroll debit cards that are the functional equivalent of cash or a check.The regulations define "functional equivalent" to mean that the employee must have access to his or her full wages from the payroll debit card on payday without cost to the employee.
The Delaware Department of Labor has adopted final regulations regarding payroll debit cards. An employer may create a payroll debit card system to pay its workers as long as it complies with all of the substantive requirements of the Delaware Wage Payment and Collection Act.- 12/12/2012
HB 569 (Ch. 140 2009)
Effective July 1, 2009
Amends section 532.01 of the Florida Statutes to include payroll debit cards on the list of permissible method of wage payment.
Guidance: Payroll Debit Card Plans
Although Hawaii's wage payment statutes and regulations do not specifically address paycards or debit cards, the agency will permit their use provided a number of conditions, posted on the agency's website, are met. Among other requirements, participation in the program must be voluntary and agreed to in writing by the employee. In addition, the employee must be notified in writing that he or she may cancel the arrangement at any time with reasonable notice. The employee also must be able to withdraw and transfer the funds on the payroll card at least once each pay period without incurring a fee for doing so.
Iowa Workforce Development Department The Department takes the position that payment using debit cards may not be made a condition of hire or employment.- 12/12/2012