On August 6, Illinois Governor Pat Quinn signed into law House Bill 5622, a bill amending the state Wage Payment and Collection Act, 820 Ill. Comp. Stat. §§ 115, et seq., and barring employers from making the use of payroll cards a condition of employment and preserving workers' right to demand more traditional forms of wage payment, such as paper checks and direct deposits into a bank account. The new law becomes effective January 1, 2015.
The new law requires, among other things, an employer using a payroll card to pay an employee's wages to meet the following requirements:
- The employer shall not make receipt of wages by payroll card a condition of employment or a condition for the receipt of any benefit or other form of remuneration for any employee.
- The employer shall not initiate payment of wages to the employee by electronic fund transfer to a payroll card account unless: (A) the employer provides the employee with a clear and conspicuous written disclosure notifying the employee that payment by payroll card is voluntary, listing the other method or methods of payment offered by the employer in accordance with Section 4, and explaining the terms and conditions of the payroll card account option, including: (i) an itemized list of all fees that may be deducted from the employee's payroll card account by the employer or payroll card issuer; (ii) a notice that third parties may assess transaction fees in addition to the fees assessed by the employee's payroll card issuer; and (iii) an explanation of how the employee may obtain, at no cost, the employee's net wages, check the account balance, and request to receive paper or electronic transaction histories, as provided in item (3); (B) the employer also offers the employee another method or methods of payment in compliance with Section 4; and (C) the employer obtains the employee's voluntary written or electronic consent to receive the wages by payroll card.
- A payroll card program offered by the employer shall provide the employee with: (A) at least one method of withdrawing the employee's full net wages from the payroll card once per pay period, but not less than twice per month, at no cost to the employee, at a location readily available to the employee; (B) at the employee's request, one transaction history, which the employee may request to receive in paper or electronic form, each month that includes all deposits, withdrawals, deductions, or charges by any entity from or to the employee's payroll card account at no cost to the employee; and (C) unlimited telephone access to obtain the payroll card account balance on the payroll card at any time without incurring a fee.
- An employer may not use a payroll card program that charges fees for point of sale transactions, the application, initiation, loading of wages by the employer, or participation in the payroll card program. Fees for account inactivity may be assessed following one year of inactivity. The payroll card program must offer the employee a declined transaction, at no cost to the employee, twice per month. Commercially reasonable fees, limited to cover the costs to process declined transactions, may be assessed on subsequent declined transactions within that particular month.
- The payroll card or payroll card account may not be linked to any form of credit including, but not limited to, overdraft fees or overdraft service fees, a loan against future pay, or a cash advance on future pay or work not yet performed.
- An employee paid wages by payroll card may request to be paid wages by another method of payment provided by the employer in accordance with Section 4. Following the request, the employer shall, within 2 pay periods, begin payment to the employee by the allowable method requested by the employee.
- A payroll card program offered by an employer shall provide the employee with protections from unauthorized use of the payroll card in accordance with State and federal law concerning electronic fund transfers.
- The employer's obligations under this Section shall cease 60 days after the employer-employee relationship has ended and the employee has been paid the employee's full and final wages.
- Within 30 days of the termination of the employer-employee relationship, the employer shall notify the employee that the terms and conditions of the account may change if the employee chooses to continue a relationship with the payroll card issuer.