Law Effective October 1, 2016

A new law in Connecticut, effective October 1, 2016, allows employers to pay wages using payroll cards, if certain conditions are met. Highlights of the law include the following:

  • An employer may offer the use of payroll cards to deliver wages, salary, or other compensation (“wages”) to employees, provided:
    • Each employee has the option of receiving wages by direct deposit and by negotiable check; and
    • The employee voluntarily and expressly authorizes—in writing or electronically—the payment of wages by means of a payroll card account without any intimidation, coercion, or fear of discharge or reprisal. An employer may not make the payment of wages by means of a payroll card account a condition of employment or a condition for the receipt of any benefit or other form of remuneration.
  • Prior to an employee electing to receive wages by means of a payroll card account, each employer using payroll card accounts must provide such employee with clear and conspicuous notice, in writing, and in the language the employer normally uses to communicate employment-related policies to its employees, of certain information (§ 1(c)).
  • Each pay period (but not more frequently than each week) an employee with a payroll card must be allowed to make at least 3 withdrawals from the payroll card account at no cost to the employee—one of which permits withdrawal of the full amount of his or her net wages (for the pay period) at a depository financial institution or other convenient location.
  • None of the employer’s costs associated with paying wages using a payroll card or establishing the payroll card account may be deducted from or charged against the employee’s wages.
  • Each employer must provide the employee a means of checking his or her payroll card account balance through an automated telephone system, automated teller machine, or electronicallywithout cost to the employee 24 hours per day and 7 days per week.

Note: Employers utilizing payroll cards are subject to additional requirements under state law, and must also comply with certain federal laws and regulations, including guidance from the federal Consumer Financial Protection Bureau.

ORIGINALLY POSTED BY HR360

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