New York Payroll Debit Card and Direct Deposit Rules Repealed

Coverage:  Employers with employees in New York who are paid by payroll debit card or direct deposit.

Effective:   Currently in effect.

Action Required:   Please contact your Human Resources Business Partner if you have any questions.

As noted in a recent Insights and Solutions newsletter, the final rules governing New York payroll debit cards and direct deposit were set to take effect on March 7, 2017. The rules defined requirements for both payment methods, including fee and other restrictions, and notice and consent requirements. By way of example, the rules obligated employers to provide employees disclosure notices (in English and the employees primary language) that advised of their payment options and stated that they were not required to accept wages by payroll card or direct deposit, and that they may not be charged any fees for services that are necessary to access wages. The payroll debit cards were also required to provide a way to withdraw up to the total amount of wages for each pay period, or the balance remaining on the payroll card, without a fee, and could not be linked to any form of credit, including a loan or advance against future pay.

On February 16, 2017, the New York State Industrial Board of Appeals (Board) revoked the final regulations, which were adopted by the New York Department of Labor (NYDOL).  The Board determined that the final regulations were invalid because the NYDOL had exceeded its authority. The Board also noted that there were nine legislative bills in the New York Legislature in recent years, which were not enacted.  

The NYDOL has 60 days to appeal the Board’s decision, but, for now, employers are not required to comply with the regulations. We will notify you if an appeal is filed and a ruling is issued on the same.   In the interim, please feel free to contact your Human Resources Business Partner if you have any questions.