New Direct Deposit & Payroll Debit Card Regulations

New Direct Deposit & Payroll Debit Card Regulations


The New York State Department of Labor recently adopted new regulations regarding employer use of direct deposit and payroll debit cards as forms of wage payment.  These new regulations become effective on March 7, 2017.

The new regulations apply only to employers as defined by New York Labor Law § 190.  This means that the new regulations do not apply to public sector employers.  They also exclude private sector employees employed in bona fide executive, administrative or professional capacities, and employees working on a farm that is not connected with a factory.

Employers covered by the new regulations are required to provide written notice to employees.  The notice must include the following information:  (1) a plain language description of all options to receive wages; (2) a statement that the employer cannot require the employee to accept wages by direct deposit or debit card; and (3) a statement that the employer may not charge any fees for necessary services to allow the employee to access his or her wages in full.

Employers must also obtain written consent before an employee is permitted to accept payment by direct deposit or payroll debit card.  The consent form must be provided in English and in the employee’s primary language if the Department of Labor has created a template notice and consent form in the employee’s primary language.[1]  Employee consent forms may also be obtained electronically, as long as the employee is permitted to view and print both the written notice and consent forms while at work and without cost to the employee.  Employees cannot electronically provide consent.

In addition, the notice from employers offering payroll debit cards must also include a list of locations, within reasonable proximity to an employee’s residence or place of work, where an employee can access and withdraw wages at no charge.  Employers can provide a link to a website that provides this information in lieu of an actual list.

In connection with this requirement, employers must ensure that there is local access to an ATM that offers no-cost withdrawal of wages from the payroll debit card prior to implementing a payroll debit card system.  Employers offering payroll debit cards must also ensure that the employee can withdraw the entire amount of wages without incurring a fee and that any changes in the terms and conditions of the payroll debit card are provided in writing to the employee at least 30 calendar days before the change(s) takes effect.  Employers must wait seven business days after an employee consents to receive payment of wages by payroll debit card before making payments by payroll debit card.

Employees may withdraw consent to payment by direct deposit or payroll debit card at any time for any reason.  Employers should obtain any withdrawal of consent in writing.  The withdrawal goes into effect upon receipt by the employer and should be implemented by no later than the next pay period following withdrawal of consent.

If an employer previously obtained a written consent from an employee, that consent will be considered sufficient as long as the employee was notified in writing of his/her ability to withdraw consent to the payment method.

According to the regulations, employers are not permitted to make acceptance of wages by direct deposit or payroll debit card a condition of hire or continued employment.  Moreover, pursuant to the regulations, an employer is specifically forbidden from taking any adverse employment action because an employee declined to provide consent to payment by direct deposit or payroll debit card.  The new regulations, though, do not take into account the fact that employers may have collectively bargained that concession into previously negotiated collective bargaining agreements.  It is unclear at this time how the Department of Labor will address that issue.

Employers considering whether to implement direct deposit or payroll debit cards for unionized employees must remember that first time implementation of either is, as a general proposition, mandatorily negotiable.  For employees who are already covered by a collective bargaining agreement that expressly provides for the method(s) of payment of wages, the employer must, according to the regulations, have union approval before paying covered employees with a payroll debit card.  Here too, though, previously negotiated collective bargaining agreements may already cover this issue.

If you have any questions about the new direct deposit or payroll debit card regulation, please contact Matthew J. Mehnert or one of our other attorneys by calling (631) 694-2300.


© Lamb & Barnosky, LLP 2016

[1] The Department of Labor is developing notice and consent forms, but they are not yet publically available.  The forms will be in English, Spanish, Chinese, Russian, Italian, Korean, French, Arabic and several additional languages and should be available at: