Page 76 - Pay Magazine s2014

Government watch
N.Y. DOL Issues
FINAL RULE
on Payroll Cards
Despite strong opposition by a major prepaid card association, the rule is being implemented anyway.
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By Thad Rueter, Senior Editor
The New York Department of Labor (DOL) issued its nal rule regulating meth- ods and payment of wages, including the use of payroll cards, in the state and includes no sub- stantive changes from its second revised proposal in June. The move comes despite the nancial service industry’s repeated attempts to argue that the rule would make it di cult for payroll card providers to continue to operate in the state and deny workers, especially the unbanked/underbanked, a choice in how they are paid. The nal rule, which takes e ect March 7, 2017, can be found on page 8 of the Sept. 8 edition of the New York State Register.
In July, the Network Branded Prepaid Card Association (NBPCA) led its third comment letter with the N.Y. DOL outlining several concerns with the rule. Most of its concerns were not addressed in the nal rule. According to the NBPCA, the rule remains inconsis- tent with Regulation E and will cause providers to incur substantial expense to maintain separate
compliance programs for New York workers; myriad fee restrictions likely will make it uneconomical
for providers to o er payroll cards; and employers don’t have control over ATM locations and therefore
a requirement to provide employ- ees with “local access” to one or more ATMs in “reasonable proxim- ity” to the employee’s place of work or residence is impractical.
“Payroll cards are a crucial tool for millions of unbanked and under- banked Americans, including nearly 30 percent of New York households, who opt for a more a ordable and convenient way to access their wages,” Brad Fauss, NBPCA presi- dent and CEO, said in a prepared statement. “By placing onerous limits on this important nancial tool, the Department of Labor is harming the very consumers it is seeking to protect. It is incredibly unfortunate that despite three pro- posals and numerous comments submitted by the nancial services industry, the department still missed the mark and, as a result, New Yorkers are now facing more bar- riers to nancial inclusion and will
be forced to rely on riskier, more expensive products to access their own money.”
One bright spot is that the com- mentary to the nal rule no longer requires securing new consents from employees who are currently being paid by direct deposit or payroll card. The commentary says that whatever consents were previously given will remain valid as long as new notices are pro- vided to employees before the e ective date of the nal rule. It also says that employees must be told about their right to withdraw consent to payment by direct deposit or payroll card. Fauss says this is a positive change because securing new consents from the millions of existing New York direct deposit/payroll card employees would have been nearly impossible.
NBPCA will be discussing the nal rule with its members to determine “next steps prior to implementation of this short-sighted rule,” Fauss tells Paybefore. “You may see some large payroll card providers pull out of the New York market,” he adds.