Employer Obligations Under the New Payroll Card Law

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On Wednesday, August 6, 2014, Governor Quinn signed House Bill 5622 amending the Illinois Wage Payment and Collection Act (IWPCA) and providing employers with the option of paying employees through a payroll card. While the new law provides an alternative to the traditional methods of payment by check or direct deposit, employers who elect this payment method must be aware of specific requirements imposed by the new legislation. Significantly, the law prohibits employers from requiring employees to receive wages on payroll cards as a condition of employment and, if an employer offers payroll cards as a payment option, it must still provide an alternative form of payment to its employees.

The following list highlights the key obligations for employers and the payroll card program as required by the new law:

  • Employers must provide employees with a clear and conspicuous written disclosure that enrollment in a payroll card program is voluntary, a list of alternative method(s) of wage payment in lieu of a payroll card, and the terms and conditions of the payroll card program.
  • Employers must receive a voluntary written or electronic consent to receive wages through a payroll card from all employees that elect that payroll method.
  • Employees must have access to his or her full net wages (twice a month at a minimum), transaction history, and account balance. Under specific circumstances, these benefits must be provided at no cost to the employees.
  • A payroll card program is prohibited from charging certain fees including fees from point of sale transactions and fees arising from program participation.
  • A program is prohibited from linking the provision of credit such as overdraft or loans or chase advances on future pay.
  • The program must provide protection against unauthorized use of the payroll card in accordance with state and federal electronic fund transfer laws.

A thorough discussion of these and other obligations can be found in our prior alert accessible here.  

Since the law goes into effect on January 1, 2015, Illinois employers who elect to provide a payroll card program should begin preparing to meet these requirements. Preparations may include drafting required notifications, creating an operating procedure for implementing and administering the program, and assessing payroll card programs/issuers to determine whether they meet the new law’s requirements.

Topics:  Employer Liability Issues, Payroll Cards, Wage and Hour, Wages

Published In: Labor & Employment Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Franczek Radelet P.C. | Attorney Advertising

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