Joining the ranks of states which have enacted a specific statute to address the payment of wages via payroll debit card, Illinois Governor Pat Quinn last Wednesday signed legislation regulating payroll debit card practices in the state. The new law is generally consistent with the Illinois Department of Labor’s recent historical enforcement practice, in that it forbids making use of the cards a condition of employment, and preserves an employee’s right to demand payment of wages via paper check or direct deposit payment. Employers also must obtain written consent from employees paid through a payroll card program, and the program cannot be linked to forms of credit such as overdraft fees, cash advances or loans against future wages.
“HB 5622 does little to modify the law in Illinois; it simply codifies and clarifies it. Most of its provisions are consistent with informal interpretations the Department had already provided, and common sense approaches we have been recommending to employers for years,” observed Chicago-based Jackson Lewis Shareholder Neil Dishman.
Although some states have enacted legislation and/or issued formal guidance regarding this increasingly common payroll debit card practice, in many states the law is unclear. Multi-state employers must analyze the wage payment options available to them in all jurisdictions in which they do business and seek legal counsel as needed.