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.
Regulation E and the Prepaid Rule
Regulation E implements the Electronic Fund Transfer Act (“EFTA”), 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 EFTA and Regulation E is the protection of individual consumers engaging in electronic fund transfers.
Effective July 1, 2007, the Board of Governors of the Federal Reserve System ("Board") amended Regulation E to expressly cover payroll card accounts. The amendment also defines "payroll card account" and revises certain provisions of Regulation E and the official staff commentary to the regulation as they apply to payroll card accounts.
In July of 2011, enforcement authority over Regulation E was transferred from the Board to the Consumer Financial Protection Bureau ("CFPB"). The CFPB issued a final rule ("Prepaid Rule") extending Regulation E to a broad range of prepaid accounts on October 5, 2016. The Prepaid Rule becomes effective April 1, 2018, and creates additional consumer protections for prepaid accounts including payroll card accounts already subject to Regulation E. Information about the Prepaid Rule, including its text and a summary of the provisions impacting payroll card accounts, can be found on the CFPB website.- 08/15/2017
CFPB Bulletin 2013-10 (Payroll Cards)
On September 12, 2013, the Consumer Financial Protection Bureau (CFPB) issued a bulletin reiterating that the Electronic Fund Transfer Act and Regulation E apply to payroll card accounts. The Bulletin emphasizes that Regulation E prohibits employers from mandating that employees receive their wages using a payroll card. The CFPB explained that an employer may offer its employees a choice between a payroll card and another payment method, and that permissible alternative method(s) of wage payment are governed by state law. The Bulletin also describes other Regulation E protections that apply to consumers who receive wages using a payroll card account, as well as the scope of the CFPB's supervisory authority.- 11/02/2015
General Counsel Opinion No. 8, Insurability of Funds Underlying Stored Value Cards
Federal Register / Vol. 73, No. 220 / Thursday, November 13, 2008
In this Opinion, the Federal Deposit Insurance Corporation ("FDIC") affirms that the funds underlying stored value products (including payroll cards) are considered insurable deposits if they have been placed at an insured depository institution. The Opinion further states that when the funds underlying a stored value card are held in a pooled account, the cardholder (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.- 12/12/2012
The Alabama statutes and regulations do not expressly address the payment of wages using paycards.- 11/02/2015
The Alaska statutes and regulations do not expressly address the payment of wages using paycards.- 11/02/2015
HB 2151 (Chapter 193)
Effective July 20, 2011
Amends Arizona Revised Statutes sections 23-350 and 23-351 to permit the deposit of wages to a payroll card account if an employee has been offered direct deposit but does not provide consent or designate a financial institution for the deposit. Requires that whenever an employee's wages are deposited to a payroll card account, the employee be provided with a statement of earnings and deductions, one free withdrawal for each deposit of wages per pay period, and a list of fees associated with the use of the payroll card account.
The Arkansas statutes and regulations do not expressly address the payment of wages using paycards.- 11/02/2015
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).
SB 211 (Public Act 16-125)
Effective October 1, 2016
This statute authorizes the payment of wages using payroll cards with the employee's voluntary and express authorization provided certain conditions are met. Among other things, the statute sets forth specific requirements for providing employees with access to cash wages and account information without cost. It also requires disclosures and alternative payment options, includes a number of fee restrictions, and prohibits linking payroll cards to any form of credit. Please consult the statute for complete and specific information.- 10/26/2016