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 reflect a forthcoming expansion of the pay statement requirements.
Updated to include the Maryland Healthy Working Families Act, effective February 11, 2018, and the forthcoming Maryland Small Business Retirement Savings Program.
Updated to include information on the Supreme Judicial Court of Massachusetts decision regarding payment of accrued sick leave on termination.
Updated to include an increase in the maximum wages payable to relatives of a deceased employee, effective December 29, 2017.
Updated to include pay frequency, pay statement and termination pay requirements of the Washington Paid Sick and Safe Leave Law, effective January 1, 2018, and the forthcoming state Small Business Retirement Marketplace.
Updated to include pay frequency requirements for fast food employees under the New York City Fair Work Practices ordinances, effective November 26, 2017, and the safe time amendments to the New York City Earned Sick Time Act.
HR and legal considerations for employers regarding electronic paycards.