New Pennsylvania Payroll Debit Card Law Contains Many Restrictions

Author: Rena Pirsos, XpertHR Legal Editor

November 16, 2016

Pennsylvania employers will be permitted to pay employees' wages, salaries, commissions or other payments by payroll debit card under a new law taking effect May 5, 2017. Employers that want to offer employees this wage payment option should take advantage of the lead time until the law takes effect, as they must comply with quite a number of restrictions before rolling out a program.

Employers will only be permitted to offer payroll debit cards issued by federally insured banks or financial institutions. And these entities must provide employees with all disclosures, notices and access to account information and other consumer protections required by the federal Consumer Financial Protection Bureau's Regulation E.

As required by most other state payroll card laws, an employer's program must be voluntary. An employee's written or electronic authorization to be paid via payroll card must be obtained first. But before an employer can even request this authorization, it must provide the employee with clear and conspicuous notice of:

  • All wage payment options;
  • All terms and conditions, including any card-issuer fees;
  • The possibility that third parties may also assess fees; and
  • The cost-free methods available to employees to access their wages.

Employers may not require employees to accept payment by payroll card as a condition of employment or the receipt of benefits. And, as applies to all other wage payment methods, employees are entitled to a statement of earnings and deductions for each payment.

In addition, there are several actions for which employers may not charge employees any fees. These include:

  • Withdrawing the full amount of net wages at least once per pay period, or once per week if paid more often than weekly;
  • Ascertaining account balances;
  • Making point-of-sale or purchase transactions with the card; or
  • Obtaining a replacement (limited to once a year) for an expired card, subject to certain limitations (note that the funds in such accounts must never expire).

In addition, employers must honor employees' requests to change to payment by direct deposit or paycheck by the first payday that occurs after 14 days from the request.

The states of New York and Connecticut also passed payroll debit card laws this year.