Payment of wages by payroll debit card is a growing trend. Now Illinois has amended state law to expressly sanction employers’ use of payroll debit cards to pay employees’ wages. Under the prior version of the law, employers were required to pay wages by check or direct deposit payment.
Under the new law, paying employees via payroll card must meet certain requirements. Among other things, the employer must:
- provide “clear and conspicuous written disclosure” that payment by payroll debit card is voluntary and list at least one other method of payment available to the employee;
- provide employees with an itemized list of fees that may be charged by the payroll debit card’s issuer and written notice that third parties may assess transaction fees in addition to the fees assessed by the card’s issuer;
- explain in writing how the employee may obtain – at no cost – all wages at least once per pay period and at least twice per month, have unlimited telephonic access to the account balance, and obtain at least one paper or electronic transaction history per month;
- not use a payroll card program that charges fees for certain specified items such as point-of-sale transactions, or one that is linked to forms of credit such as overdraft fees, cash advances or loans against future wages; and
- obtain written consent from employees paid through a payroll card program.
The law also prohibits making use of payroll cards a condition of employment, and preserves an employee’s right to choose payment of wages by paper check or direct deposit payment.
Although the changes in the law are effective January 1, 2015, it has been the Illinois Department of Labor’s enforcement practice to permit the payroll debit card option with employee consent and clear card program disclosures.