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APA Objects to NYSDOL's
Proposed Wage Payment Rules

By William Dunn, CPP

New York State's revised proposed rules for methods of wage payments would have the practical effect of requiring every employer paying employees in the state, either by direct deposit or payroll card, to reconfirm the employees' choice of payment method.

In November 2015, the APA wrote to the New York State Department of Labor (NYSDOL) objecting to the proposed rules. The revised rules adhere closely to the original proposal and continue to warrant the summary the APA provided: "Several provisions of the Revised Rule would place undue burdens on payroll card issuers and program managers while offering little or no benefit to employees. Again, these burdens will limit the ability of providers to continue to offer payroll cards in New York, which in turn limits the ability of employers to make electronic wage payments available to unbanked workers."

"The revised proposal is a major disappointment," said Cathy Beyda, Chair of the APA's Subcommittee on Payroll Cards. "It includes only two minor changes and fails to address most of the concerns raised by the APA. We need to work together to demonstrate the significant impact that the proposed rule would have not only on employers but on the employees the Department purports to protect."

Employees in New York cannot be forced to accept payments by either direct deposit or payroll card and have the right to convert to paper check payments at any time. The revised proposal would reinforce this tenet by requiring employers to retain written consent from each employee. Wage payments to employees who do not provide such consent by the time the regulations go into effect presumably would need to be converted to paper checks.

The onerous nature of the new rules will fall most heavily on employers that offer payroll cards and on the employees who rely on the cards. This is because the NYSDOL is, in addition to applying the consent requirement, also applying a seven-day cooling-off period to any person who chooses to receive his or her pay on a payroll card. Once consent is provided, the employer will not be permitted to make a payment to the card account for seven days. Specifically, the regulation says that employers must obtain consent "at least seven days prior to taking any action to issue the payment of wages by payroll card." A conservative reading of that section may infer that the employer is not allowed to complete any necessary paperwork, prepare an ACH file, or do anything else related to the payment during the seven days.

In a May 2015 press release, New York Governor Andrew Cuomo cited figures that “an estimated 13,000 businesses in New York State pay approximately 200,000 workers through debit cards.”

While some, perhaps many, employers may have retained written consent from employees who use direct deposit, no employer paying employees in New York on payroll cards is currently in compliance with the revised rules.

The APA fears that the comments of much of the business community have fallen on deaf ears at the NYSDOL. Accompanying the revised regulations, NYSDOL provided summaries of the comments it received from the public, along with their responses. These comments reflected the APA's views as reflected below:

Comment 3: "The seven-day waiting period for consent to be effective should be revised. It is onerous for employers, as being too restrictive, and employees, as not providing sufficient levels of protection."

NYSDOL reply: "The Department disagrees. This period ensures that employees have the opportunity to evaluate and assess the method of payment in a meaningful way without being limited in their ability to withdraw their consent immediately."

Comment 10: "Existing payment authorization should remain valid upon the effective date of this rule."

NYSDOL reply: "Consent provided by an employee prior to the effective date is only valid if it complies with the requirements of this rule. Prior consent that was provided without the requisite notices or in conflict with the terms of this rule is ineffective."

These two comments and replies reflect the disconnect between the intent of the NYSDOL and the effect the rules will have on state residents. The NYSDOL will apply a seven-day interruption to more than 200,000 workers who have already chosen to receive their pay on payroll cards. Employees may suffer a cascade of unintended consequences as features and services available through the card accounts, such as automatic bill pay, are interrupted.

The rules were first proposed in 2015 and scheduled to be released in final form in late May. Instead, on June 15, NYSDOL issued revised rules that were open to comment for 30 days. The final rule will go into effect six months after it is published in the State Register. The APA expects the final rule will be published without delay.



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