Overview: Paycards, or payroll cards, are a fast growing method of paying wages to employees using electronic means. They are a good alternative for employees who do not, or cannot, have a bank account that is capable of receiving direct deposits. Approximately 10% of US employees fall into this category, with the greatest number of them working in industries such as hospitality, food service and agriculture.
Federal paycard laws and regulations generally mirror direct deposit laws. Employers' paycard accounts must meet the same legal requirements as direct deposit accounts. An increasing number of states have passed a paycard law, and there is much variation among these laws. Employers must comply with all applicable federal and state laws pertaining to paycards.
Trends: Employers should check the laws of the states in which they pay employees for variations from federal law. Depending on the state, a number of additional restrictions or guidelines may apply. The following are some examples:
Author: Rena Pirsos, JD, Legal Editor
Updated to include the Wage Theft Transparency Act, effective April 13, 2017.
Updated to reflect a forthcoming change in pay frequency for service employees.
Updated to include a new St. Louis minimum wage notice requirement, effective February 28, 2017.
The State of New York Industrial Board of Appeals has issued a decision invalidating final paycard regulations. In addition, a resolution has been introduced in the US House of Representatives challenging forthcoming federal paycard regulations.
Updated to include expanded unclaimed wages requirements, effective February 2, 2017.
Updated to include forthcoming final paycard regulations issued by the Consumer Financial Protection Bureau.
HR and legal considerations for employers regarding electronic paycards.