National Law Review Warns of Payroll Card Pitfalls

by Ben Jackson 0

In an article about payroll cards, attorney Jami Suver warns that employers must comply with state payroll laws when using payroll cards. Unfortunately, this is another example of payroll cards being presented as the cause of a much bigger problem.

The lesson to employers (and multi-state employers pay particular attention) is clear—make sure that your state allows payment by prepaid debit cards and that you comply with all consent, fee notice, and other requirements. Although approximately half of U.S. states allow payroll cards to be used under some circumstances, state requirements related to their use vary widely.

Suver is correct in that employers need to make sure that they comply with all laws when paying employees with cards, but that is no different than if they are paying employees with direct deposit, checks, or cash. State payroll laws are an ever changing patchwork, but there is nothing inherent to payroll cards that make them worse than other forms of payment. Bank accounts can carry fees, check cashers charge fee, and cash has its own set of concerns. The issue is execution of the program, much of which is up to the employer to do properly. Providers must try to idiot-proof their programs against employers and managers who don’t understand or care about payroll laws, but ultimately, legislators and regulators need to realize that payroll cards are not a problem in and of themselves.

Overview by Ben Jackson, Director, Prepaid Advisory Service at Mercator Advisory Group

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