The New York State Department of Labor (NYSDOL) issued final regulations in September 2016, significantly restricting the use of payroll debit cards and imposing disclosure and consent requirements for direct deposit. The regulations (12 NYCRR §192) were to become effective on March 7. However, in a Feb. 16 decision, the New York State Industrial Board of Appeals (IBA) held the regulations “invalid” and “revoked.”
“We find the regulations are invalid because they exceed [the NYS Commissioner’s] rulemaking authority,” the IBA held.
In striking down the regulations, the IBA noted that at least eight bills on payroll debit cards had been introduced in the New York state legislature in recent years, and none of the bills were enacted.
“The legislature’s failure to amend the statute demonstrates their satisfaction with the current statutory language or their inability to reach consensus on the manner in which payroll debit cards should be regulated under the Labor Law, if at all,” the IBA found.
The IBA also found the regulations infringed on banking regulations that set fees banks may charge and that the NYSDOL, by also seeking to regulate such fees, overstepped its jurisdiction. The NYSDOL has 60 days to appeal the decision.
While the IBA’s analysis was focused on the proposed provisions regulating payroll debit cards, the regulations also established new requirements regarding use of direct deposit. Although the provisions regarding direct deposit were not addressed by the IBA, the IBA order revokes the entire regulation (12 NYCRR §192).
Agency Seeks Feedback from Employers
In connection with the adoption of new regulations governing the methods of payment of wages, the New York Department of Labor (NYDOL) has released proposed model templates for written notice and written consent regarding payment via payroll debit card and direct deposit. These resources are available for public comment and feedback until February 10, 2017.
The state of New York has enacted new regulations, effective March 7, 2017, to provide clarification and specification as to permissible methods of payment of wages, including payment via payroll debit cards and direct deposit.
Under the regulations, an employer who offers one or more methods of payment of wages that require consent (e.g., direct deposit or payroll debit cards) must obtain such consent in writing and must ensure that:
- It obtains the employee’s informed consent without intimidation, coercion, or fear of adverse action by the employer for refusal to accept payment of wage by direct deposit or payroll debit card; and
- It does not make payment of wage by direct deposit or payroll debit card a condition of hire or of continued employment.
Affected employers are advised to read the regulations in their entirety for additional requirements.
Proposed Model Templates for Employer Feedback
Model templates for written notice and written consent are available for public comment and feedback until February 10, 2017. The proposed templates are available below:
The NYDOL encourages interested parties to email comments and feedback to email@example.com. According to the NYDOL, after any changes from such comments and feedback are made, updated templates will be posted prior to the effective date of the rule, along with translations into additional languages specified during the rulemaking process. Stay tuned for updates and finalized templates.