Paying Employees Using Payroll Debit Cards? Be Compliant!

Many employers, over the last few years, have been electing to pay their employees using payroll debit cards. An estimated 13,000 businesses in New York State pay approximately 200,000 workers through debit cards, according to the New York State Department of Labor.

Providing employees their pay by way of debit card holds many advantages to both the employer and employee.

  • Some employees do not have a bank account.   Payroll debit cards permit the employee to receive their pay without having to pay fees at a check cashing location.
  • Should an employee not be scheduled to work on the pay date, they do not have to come into work to collect their paycheck. It would automatically be accredited to their debit card.
  • The risk of an employee having their paycheck lost or cash stolen is eliminated.
  • For employers, it reduces administrative fees, including stop payment fees for lost or stolen paper checks.

Employers must be aware that if they are utilizing payroll debit cards, ATM and usage fees associated with the cards cannot bring the employee’s wages below the minimum wage.

Last summer, Governor Andrew Cuomo announced that the New York State Department of Labor has published draft regulations to better manage how businesses pay workers with debit cards, in order to help protect workers’ wages. The regulations:

  • Require employers who utilize debit card payroll to obtain advance consent from the employees and to maintain that documentation for six years;
  • Require employers to notify employees about local locations where they can access their wages for free;
  • Provide unlimited free ATM withdrawals within a local network and a method to withdraw the full amount of wages each pay period.

Fees for customer service, account maintenance, overdraft and inactivity are expressly prohibited.

It is important to remember that even when paying with debit cards, all employers in New York State are required to give employees a wage statement or pay stub each payday. These stubs, along with employer records, should include how long each employee works, the rate or rates of pay, how each employee is paid, itemized deductions, and credits claimed by the employer (e.g. tip or meal and lodging allowances).

As with any and every policy and procedure, employers are encouraged to contact a professional to ensure their practices are in line with current labor and employment laws.



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