New York’s Payroll Card Regulations are Overturned

by Ben Jackson 0

The New York State Industrial Board of Appeals revoked rules on payroll cards issued by the New York Department of Labor, because they said that the regulations exceeded the department’s authority, the National Law Review reported on Feb. 22.

In striking down the regulations, the IBA noted that at least eight bills on payroll debit cards had been introduced in the New York State legislature in recent years, and none of the bills were enacted. “The legislature’s failure to amend the statute demonstrates their satisfaction with the current statutory language or their inability to reach consensus on the manner in which payroll debit cards should be regulated under the Labor Law, if at all,” the IBA found. In addition, the IBA found the regulations infringed on banking regulations that set fees banks may charge and that the NYDOL, by also seeking to regulate such fees, overstepped its jurisdiction. The DOL has 60 days to appeal the decision.

The rules were caused concern for employers and payroll card providers because the rules would have made payroll programs more cumbersome and costly to administer. Providers were weighing whether or not they would continue offering payroll cards in New York State. The revocation of the rule gives them a little more breathing room, but the attorney general of New York has been hostile to prepaid cards in general, so the fight may not yet be over.

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

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