Alex Bartels, Prepaid Enrollment Manager, rapid! PayCardUpcoming Webinar:
Wage and Hour Summit: Segment 1 – Tuesday, April 4, 2017For more information: www.americanpayroll.org/course-conf/webinars
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Paycard Regulations have changed on a state level in seven states in the last three years.
Federal Regulations, set by the CFPB, impacting paycards are set to go into effect in April of 2018.
These regulations impact the methods that companies can use to pay employees, the fees that can be charged to employees by card providers, and the requirements for disclosures and consent.
PA
NY
IA
MA
CT
RI
IL
PENNSYLVANIA
Effective: May 5, 2017• State officially permits payroll card use upon employee
written or electronic request.Prior to obtaining the employee’s authorization, the
employer must provide its employee with clear and conspicuous notice in writing or electronically of: All wage payment options, Terms and
Conditions of the payroll card account; including the fees that may be deducted from the account by the card issuer.
Notice that third parties may assess fees, and the methods available to the employee for accessing wages without fees.
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3
PENNSYLVANIA
Effective: May 5, 2017• Among other things, employers are prohibited from
making the payment of wages via payroll card account a condition of employment.
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IOWA
Introduced January 2017• Senate File 141Allows payroll cards: Employee must agree in writing No fees for withdrawals once per pay
period Employee can have name put on card
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4
MASSACHUSETTS
Introduced January 2017• Senate Docket 1052Allows payroll cards: Employee must agree in writing Waiting period of seven days after
employee gives written consent No fees for withdrawals once per pay
period “Local access” to one or more ATMs at
no cost
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MASSACHUSETTS
Introduced January 2017• Senate Docket 1052 Among other things, employers are
prohibited from making the payment of wages via payroll card account a condition of employment.
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CONNECTICUT
Effective: October 1, 2016• Last state to expressly authorize paycards as a
viable method of wage payment as long as employer receives employee’s consent.The statute does not preempt or override
an existing collective bargaining agreement with respect to methods of wage payment.
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CONNECTICUT
Effective: October 1, 2016• Among other things, the statute sets forth
specific requirements for providing employees with access to cash wages and account information without cost.
• Requires disclosures and alternative payment options, includes a number of fee restrictions, and prohibits linking payroll cards to any form of credit.
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6
RHODE ISLAND
Effective: July 15, 2015• Authorizes the payment of wages by credit to
a payroll card account upon written or electronic request of the employee.
• Among other things, the statute defines “payroll card account” and requires that employees be able to make at least one withdrawal from the payroll card account each pay period without charge.
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ILLINOISEffective: January 1, 2015
• Wage Payment and Collection Act amended to authorize the payment of wages and final compensation by payroll cards.
• Adds section 14.5 to the Act to specify the conditions under which payroll cards may be used.Among other things, this section requires that
payroll cards be offered on a voluntary basis.Another method(s) of payment must be offered
in compliance with the Act.Certain Disclosures must be made and consent
obtained before wages are paid by electronic fund transfer to a payroll card account.
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ILLINOISEffective: January 1, 2015
• Section 14.5 addresses methods of accessing full net wages and account information without cost.
• Prohibits specific fees and the use of payroll cards linked to credit and identifies post employment responsibilitiesWithin 30 days of termination of employment,
an employer must notify the employee that the Terms and Conditions of the card account may change if the employee continues a relationship with the paycard issuer.
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NEW YORK
Effective: March 7, 2017 Delayed by Administrative Court
• An employer must provide its employee with information about their payment options and obtain the employee’s voluntary consent prior to paying wages using a payroll debit card.The notice and consent must be provided
in English and in the employee’s primary language when a template is available from the NYSDOL.
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8
NEW YORK
Effective: March 7, 2017 Delayed by Administrative Court
• An employer must provide its employee with information about their payment options and obtain the employees’ voluntary consent prior to paying wages using a payroll debit card.After providing notice and obtaining
consent, the employer must wait seven business days before taking action to pay the employee using the payroll debit card.
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NEW YORK
Effective: March 7, 2017 Delayed by Administrative Court
• The rules also include strict cash access requirements, prohibit kickbacks, prohibit linking payroll debit cards to any form of credit, and require advance notice of changes in Terms and Conditions.
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How will you stay informed?
How will you meet these requirements?
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Very important to have a paycard partner that can make state by state changes with their program to keep your
company compliant.
Innovation is the KeyFlexible Tools are Required
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Leading Providers must provide tools to meet all of these challenges• Provide value to employees• Enable cost savings and efficiency for employers• Provide tools to enable compliance
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Compliance Information on Paycard Requirements
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www.rapidpaycard.com/compliance-map
State Level Fee Modification
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• One fee schedule does not meet all state requirements• Providers must know and react to the employment state• Dynamic pricing is required• Old processing systems will fall behind Providers will not support service in some states; or Require different cardstock by state The administrative burden may fall to the employer
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Onboarding Tools to Track Employee Consent
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Innovation is required to meet the complexity of the changing consent and disclosure requirements.
NEW FINANCIAL REALITY
More than 5 million Millennialsin the U.S. do not have a checking account.
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More than 1/3 of all Millennials
Say it would be valuable to have their pay loaded onto
a paycard each payday. That is over 29 million
Millennials!
37%
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NEW FINANCIAL SOLUTION
57% of ALL employeesThink that paycards should be offered by employers as a payment option. This feeling only grows with younger
workers with 64% of Millennials agreeing.
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PAYROLL CARDS AND SMARTPHONES
Age Distribution of Payroll Card UsersBase= Respondents whose employer puts their earnings on a prepaid card
and gives it to them.
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
18 to 24 25 to 34 35 to 65
Payroll Card Users OWN a Smartphone
94%
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Paycard Tools
26Sponsored by
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Geographically Specific Information
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Program Information in Multiple Languages
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ATM Locators
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Full Consent Tracking for Paycard and Direct Deposit
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Administrative Tools & Reporting
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Easy Integration for Efficiency• Ease of card issuance and funding• Flexible file formats
• Existing file formats with required data elements
• Real-time integration with APIs• Tools to connect with ease and avoid IT projects• Standard integration with your payroll software
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Summary
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• Regulatory changes at a state and federal level will impact your payroll and paycard processes.
• These regulations impact the methods that companies can use to pay employees, the fees that can be charged to employees by card providers, and the requirements for disclosures and consent.
• Information is critical to ensuring compliance• Technology can ease your company’s administrative burden.• Paycard providers will need to innovate to keep up, not all
changes can be delayed.
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