Employee debit cards offer a convenient alternative to paper checks. A payroll card allows businesses to avoid higher payroll fees. It also gives employees who may not have a bank account an easy way to access their money.
An estimate suggests $68.9 billion will be loaded onto payroll cards by 2017, reports MSN News. So you will be in good company, if you decide on this option.
But beware of state and federal wage rules when putting a debit card payment system into place. The American Payroll Association and the National Consumer Law Center share some cautions. Keeping these rules in mind can help you avoid legal hassles down the road.
Things to Watch with Payroll Card Programs
First, be sure employees can access their wages in cash without fees at least once a pay period. Some debit cards have fees connected to withdrawing money.
But “free and clear access” to funds is required by many state wage and hour laws.
Any payroll card program you put into place should allow this access in any one of a number of ways. They could include things like ATM withdrawals, convenience checks, cash back at point of sale services or bank teller transactions.
Always Provide a Choice
Second, make sure employees have a choice other than a payroll card if they prefer it.
According to the American Payroll Association and the National Consumer Law Center, employees cannot be forced to take a payroll card as their only payment option. Direct deposit might be one option. However, some state wage and hour laws my also require a paper check option.
For example, a McDonald’s franchise in northeastern Pennsylvania was sued recently. The issue was a payroll card one former employee claimed had too many fees, the Huffington Post reported. The employee also claims the restaurant offered no other payment options.
Make sure you have all the information before starting a payroll card program in your business. Payroll cards can work effectively so long as you follow all the rules.
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