Payroll cards targeted by government

Employers in several states will have to tiptoe around new laws addressing concerns about payroll cards. HRM investigates

Payroll cards targeted by government

Years of scrutiny over payroll cards are coming to a head in Illinois, where the House has approved legislation to protect workers who are paid with the cards.

By limiting fees for payroll cards and requiring employers to provide the option of an alternative payment method, the House Bill 5622 aims to protect workers. It was crafted in response to reports that some workers were charged fees such as $5 account inactivity fees, $3 for monthly statements, and 50-cent charges every time the cards were used. The cards have proven popular amongst many employers who can save money by using the cards in lieu of checks, for which banks often charge fees. 

Meanwhile in Hawaii, the state government will be banning payroll card use as of September 1 this year. And last year, the state of New York launched a formal investigation into the use of the cards by about twenty employers, including McDonald’s, Walgreen Co and Wal-Mart.

Federally, employers cannot mandate that workers receive wages on payroll cards. They are also required to give cards that disclose fees in writing, offer access to account history, and limit liability for unauthorized use.

Aite Group expects payroll card use in the US to more than double by 2017, from $34.1billion in 2012 to $68.9billion by 2017.

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