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 information regarding the forthcoming Small Business Retirement Marketplace.
Updated to include a forthcoming law regarding payout of accrued paid sick leave on termination.
Updated to include the forthcoming Maryland Small Business Retirement Savings Program.
Updated to include the forthcoming Connecticut Retirement Security Program.
Updated to remove the requirement to provide St. Louis minimum wage notices, which is preempted by state law, effective August 28, 2017.
Updated to include a law prohibiting certain deductions from the pay of temporary employees, effective September 1, 2017.
Updated to include forthcoming premium pay requirements under the Oregon scheduling law.
Updated to reflect forthcoming requirements for fast food employers under the New York City Fair Work Practices ordinances.
HR and legal considerations for employers regarding electronic paycards.