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New York Adopts Wage Payment Method Regulations


Shelby Krzastek

On September 7, 2016, the New York State Department of Labor (“NYDOL”) enacted a regulation setting the conditions by which employers in New York State can pay wages to their employees. The final regulation details the four permissible methods for paying employee wages—cash, check, direct deposit, and payroll debit cards—and outlines the strict notice and consent requirements for paying wages by direct deposit or payroll debit cards. The regulation addressing payroll debit cards are especially important, as this payment method has until now been less regulated than more traditional payment methods, like cash and check. The regulation will be implemented March 7, 2017, and incorporates most of the provisions that the NYDOL initially proposed on June 5, 2016.

The regulation requires an employee to provide “consent” to receive wages by direct deposit or payroll debit card, prohibits employers from taking adverse employment actions against employees who decline to accept wage payments by direct deposit or payroll debit card, mandates that employers provide notice to employees naming other available ways of paying wages, and applies many conditions that limit an employer’s ability to pay employees’ wages by payroll debit card.

Payroll debit cards provide access to an account with a financial institution established directly or indirectly by the employer, to which transfers of the employee’s wages are made on an isolated or recurring basis. According to the new NYDOL regulations, in order to pay employees via payroll debit card, an employer must provide local access to one or more ATMs that offer withdrawals at no cost to the employee and provide at least one method to withdraw up to the total amount of wages for each pay period or balance remaining on the payroll debit card without the employee incurring a fee. The regulation also prohibits an employer or agent from charging an employee a fee for items including application, initiation, loading, participation or other action necessary to receive wages or to hold the payroll debit card, point of sale transactions, overdraft, shortage or low balance status, account inactivity, replacing the payroll debit card, closing an account, or issuing payment of the remaining balance by check or other means.

With respect to direct deposit, an employer must get written consent from the employee and maintain a copy of the employee’s consent for six years following the last payment of wages by direct deposit. In addition, any direct deposit must be made to a financial institution selected by the employee. The regulation further explains that an employee’s permission may be withdrawn at any time. If the employee withdraws their consent, the employer has a maximum of two weeks to stop payment by direct deposit and begin providing wages to that employee by check or another payment method.

The regulation applies to all employees who work in New York State, except for any person employed in a genuine executive, administrative, or professional position whose earnings exceed $900 per week. The regulation does not apply to employees who work on a farm that is not connected with a factory. The NYDOL will be issuing notice and consent templates, in English and many other languages, which can be used by employers to inform their employees of the new rights created by this regulation.

Employees depend on consistent and reliable payment methods. This NYDOL regulation serves to ensure that employees continue to receive regular and fair payment, even with new methods of wage payment, such as payroll debit cards. If you believe that your employer has violated your rights, contact The Harman Firm, LLP.

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