We have been following litigation in Pennsylvania challenging the use of payroll debit cards by employers to pay employees. In one such case, the Pennsylvania Superior Court recently ruled that an employer violated the Pennsylvania Wage Payment and Collection Law (WPCL) by requiring employees to accept their wages on a payroll debit card, rather than in cash or by check.
The Pennsylvania General Assembly has stepped in to modernize the law and bring some welcome clarity to this issue. On November 4, 2016, Governor Tom Wolf signed into law Act 161, which amends the Pennsylvania Banking Code to expressly permit the use of payroll debit cards, with certain conditions. These conditions include the following:
- Payment of wages by payroll debit cards must be optional for the employee, and the employer cannot mandate such use to receive wages;
- The employer must comply with various notice and authorization requirements;
- The card must allow one free withdrawal of wages each pay period and one in-network ATM withdrawal at least weekly;
- The employee must have the ability to check the card’s balance electronically or via telephone without cost to the employee; and
- There must be no fees associated with various actions associated with the card, including the issuance of the initial card and one replacement card per calendar year, the transfer of wages to the card itself, and for non-use of the card for a period of less than 12 months.
The Act makes clear that it supercedes any inconsistent provision in any other statute, rule, or regulation, confirming that payment of wages with a payroll debit card in compliance with the Act’s requirements will comply with the WPCL. The Act will take effect in 180 days of its enactment on November 4.
For employers who wish to use payroll debit cards to pay wages, Act 161 provides a blueprint for how to do so in a manner that complies with Pennsylvania law. These requirements are somewhat complicated, however, and should be followed closely. Also, Act 161 confirms that use of payroll debit cards in a manner inconsistent with its requirements will violate Pennsylvania law. Employers who wish to use this new technology to pay employees should keep these points in mind to avoid future legal trouble.