New Direct Deposit/Payroll Card Rules Tossed Out

New York Industrial Board of Appeals Revokes Department of Labor's Payment of Wages Regulation

Payroll Card Rules

We recently sent out an article regarding new rules the New York State Department of Labor adopted intended to protect employees by clarifying their options on the method of payment of wages.  The regulations created additional disclosure and authorization steps for employers in order to pay wages via direct deposit or payroll debit card. It also required all employers who currently  pay their employees by direct deposit to provide a notice to employees of their rights under the labor law.  This notice was to be given to employees prior to the rules effective date:  March 7, 2017.

In a decision issued on February 16, 2017, the State’s Industrial Board of Appeals revoked the entire rule, which has been challenged by a payroll card provider.  As a result of the IBA’s decision, employers are relieved of the new obligations regarding payment of wages by payroll card, and employers who use direct deposit will not be required to distribute any kind of notice of rights to their employees by March 7th.  The entire rule has been revoked.

The Board ruled that the Department of Labor did not have the statutory authority to promulgate the rule, but that the Department of Financial Services does, and so it is possible that the DFS could create a similar rule at a later date.