On August 6, 2014, Illinois Governor Pat Quinn signed legislation (House Bill 5622), now P.A. 98-0862, amending the Illinois Wage Payment and Collection Act to recognize payroll cards as an authorized method for wage payment in Illinois. Beginning
Jan. 1, 2015, employers may deposit a consenting employee’s paycheck onto a payroll card, which is similar to debit card. This is a convenient method for receiving paychecks for those without checking accounts or access to direct deposit.
The new law imposes certain obligations on employers using payroll cards including:
- Offering another method of payment, such as cash or check;
- Providing employees free access to their wages at least once every two weeks, and free access to transaction histories at least once a month;
- Receiving voluntary consent from an employee before using the payroll card—giving consent cannot be a condition of employment;
- Upon receipt of an employee’s request to move from payroll card to another payment method, employers must effectuate the change within two pay periods;
- Providing to the employee written disclosures regarding the terms and conditions of the payroll card, and an itemized list of fees, before using the payroll card.
In addition, payroll cards cannot charge certain fees, such as an initiation fee, a declined transaction fee, or a point of sale transaction fee. An inactivity fee can only be charged after one year of inactivity. This is intended to limit excessive card fees and bar linkages with potentially abusive credit products.
Illinois is following in the trend of 23 other states that have enacted similar legislation or adopted similar policies with regard to payroll cards, including Arizona, California, Colorado, Delaware, Florida, Kansas, Maine, Maryland, Michigan, Minnesota, Montana, Nevada, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Oklahoma, Oregon, Tennessee, Vermont, Virginia, and West Virginia.