Effective March 7, 2017, employers who pay wages via direct deposit and/or payroll debit card will need to comply with more stringent requirements. The New York State Department of Labor (the “NYSDOL”) recently issued final regulations governing the methods that New York employers may use to pay most “non-exempt” employees. The regulations impose a number of new requirements on employers who remit wages via direct deposit and payroll debit card, including new notice and consent requirements that employers must comply with prior to utilizing such payment methods.

Who do the regulations apply to?

The new regulations apply to all employees who work in New York State with the exception of executive, administrative and professional employees – essentially overtime-exempt, white collar employees – earning in excess of $900 per week (or $46,800 annually). The regulations also do not apply to employees who work on farms not connected to a factory.

Consent Requirements Applicable to Direct Deposit and Debit Card Payments

Prior to issuing payments via direct deposit or debit card, employers must obtain signed consents from employees (which employees are permitted to withdraw at any time). Employers cannot threaten adverse action against employees who refuse to provide the consent, or condition an individual’s hire or continued employment on the provision of his/her consent.

Notably, consents obtained prior to the March 7th effective date will remain valid provided that employees who have given their consent are also provided the notice described below prior to March 7th, and are informed in the notice that they are permitted to withdraw their consent at any time.

Notice Requirements Applicable to Direct Deposit and Debit Card Payments

The regulations require employers to issue a written notice to employees: (i) describing all of the employees’ options for receiving their wages; (ii) stating that employees are not required to accept their wages by direct deposit or debit card; (iii) stating that employees will not be charged any fees for services necessary to access their wages; and (iv) if offering employees the option to receive payment via debit card, a list of locations where employees can withdraw their wages (or a link to a website which provides such a list).

Significantly, both the notice and consent must be provided in English and in the employee’s primary language once the NYSDOL issues a template notice and consent in that language. The NYSDOL has advised that it will be issuing notice and consent templates, however, it has yet to do so.

Additional Debit Card Payment Requirements

In addition to the notice and consent requirements outlined above, the regulations also impose several other requirements specific to payroll debit card programs. Employees must be able to access an ATM located within a “reasonable” travel distance to their home or work location, however, the term “reasonable” is not defined in the regulations. Additionally, employees must be able to make unlimited, free withdrawals, and cannot be charged any fees for overdrafts, shortages, account inactivity, maintenance, customer service, or accessing account balance information, among other items listed in the regulations.

Next Steps

In advance of the regulations’ March 7th effective date, employers who pay their non-exempt employees via direct deposit or payroll debit card should (i) provide the written notice required by the regulations to covered employees, and (ii) obtain employees’ voluntary consent authorizing their preferred method of payment (if such consent is not already on file). Employees who refuse to provide their consent will need to be issued checks.

In addition, employers who offer payment by payroll debit card should review their provider contracts to ensure that they are compliant with the new regulations. It is especially important that employers confirm that employees are not being assessed any fees or other charges in connection with their payroll debit card accounts.

* Alannah Heffernan is a law school intern currently attending Brooklyn Law School.