|
January 20, 2011
New Rules
Regarding the Payment of Wages by Direct Deposit and Payroll Debit
Card
by James M. Crowley
Recently enacted legislation (December 2010) will help
Michigan school districts seeking to convert to a "paperless
payroll" through the use of direct deposit and payroll debit
cards. Under prior law, a school district could not pay
employee wages by direct deposit or issue a payroll debit card
without the "full, free and written consent" of the
employee. The consent requirement under prior law has prohibited
some school districts from going to a completely paperless
payroll. Under the new law, a school district may require
employees to receive wages by direct deposit or a payroll debit card
without their consent if certain requirements are met.
The new law allows a school district to pay wages by
direct deposit or through the issuance of a payroll debit card
without the consent of the employee if the following requirements are
met:
- Employees
must receive a written form that allows the employee the option
to receive wages either by direct deposit to the employee's
account at a financial institution or through a payroll debit
card. The form must include a statement indicating that
failure to return the form within 30 days with the account information
necessary to implement direct deposit will be presumed to
indicate consent to receiving wages through a payroll debit
card.
- With respect to a payroll debit card, the following
additional written disclosure is required:
- The
terms and conditions for use, including an itemized list of any
and all fees;
- The
methods for accessing wages without charge.
- A
statement that, if the payroll debit card is used outside of
the specified network of automatic teller machines, both the
payroll card issuer and the operator of the automatic teller
machine may impose charges.
- The
methods to obtain free balance inquiries.
- The
employee's right to elect to change the method of receiving
wages at any time.
- That
the payroll debit card does not provide access to a savings or
checking account.
The new law further provides that an employee may
request a change in the method of receiving wages at any time.
The employer shall take no longer than one pay period to implement
the change after the employer receives the request and any
information necessary to implement the request. An employer
shall allow an employee to select payment by either direct deposit or
electronic transfer freely, without intimidation, coercion, or fear
of discharge or reprisal for the choice.
With respect to employees currently being paid by direct
deposit, the new law provides that the method of payment shall not be
changed to a payroll debit card without the written consent of the
employee.
In addition to the above, the new law also sets forth new
requirements for payroll debit cards. Under the new law, a
payroll debit card must have all of the following characteristics:
- The
employee must be entitled to make at least 1 withdrawal or
transfer without charge each pay period, but not more frequently
than once per week, for any amount the employee elects up to the
balance accessible through the card.
- Changes
in fees or terms of service are prohibited unless the employee
has received a written notice at least 21 days in advance of the
date that the changes take effect identifying the changes.
- The
employee must be allowed to make an unlimited number of balance
inquiries without charge, either electronically or by telephone.
- The
payroll debit card cannot be linked to any form of credit,
including a loan against future pay or a cash advance on future
pay.
If you have any questions or you would like to further
discuss this matter, please feel free to contact Jim Crowley (jcrowley@clarkhill.com; 248.988.5851).
|
