The deadline to comment on the New York Department of Labor’s revised rule proposal covering payroll cards – at the end of this month – is fast approaching.
The reissued rulemaking, published October 28, was in response to the rush of comments the Department received on the initial May 27 proposal. Responses were from a variety of stakeholders, including the financial services industry, employers, employees and employee advocates. They ranged from arguing against any restrictions on payroll cards to calling for them to be prohibited entirely.
In summarizing its response to the myriad of comments, in the revised proposal the Department states, “while the payment of wages via Payroll Debit Card can help ensure employees with access to wages in a free and effective way, restrictions and employee protections need to be implemented in order to ensure that employees can receive their wages, in full, in line with the requirements of Article 6 of [New York’s] Labor Law.”
Although in the revised proposal the Department makes some efforts to address industry concerns, there are still questions regarding the practicality of implementing the provisions posed that support commenting on it. For example, the original proposal required that, after providing employees disclosures described in the proposal regarding wage payment by payroll card, the employer would have to wait seven business days before seeking an employee’s consent to this payment method.
Noting comments that the proposed provision was “onerous and would cause significant hardship to employers,” the Department revised it to allow employers to obtain employee consent immediately after providing the required disclosures. However, the revised proposal still contains a seven business day waiting period – this time for an employer to act on the employee’s consent.
The current proposal includes several other revisions, among them:
- Allowing an employer to provide employees a list of ATM locations where they can access and withdraw wages for free that is in “reasonable proximity” to either their residence or home. Previously, the proposal required that the employer’s list include ATMs near both the employee’s home and job.
- Removal of provisions regarding fraud/dispute resolution, banking statements and transactional statements that were considered both duplicative and inconsistent with Regulation E. For example, some commenters noted that those requirements would shift certain compliance functions from banks to employers that are not accustomed to those regulatory burdens, and require issuers to go to great lengths to modify compliance procedures that would only apply to New York state. Commenters also reiterated that the proposal would significantly overlap with potential changes to Regulation E in the CFPB’sPrepaid Card Rule Proposal.
- Providing that the final rule would be effective six months after publication, rather than immediately. The Department acquiesced to comments from employers and financial institutions that time would be needed to implement systems and contractual changes necessary to comply with the rule.
Comments to the revised proposal are due Friday, November 27 (i.e., 30 days after the proposal’s publication in the NYS Register). They can be submitted to Michael Paglialonga, Department of Labor, Building 12, State Office Campus, Room 509, Albany, NY 12240, or e-mailed to [email protected].