On November 4, 2016, Pennsylvania Governor Tom Wolf signed into law Senate Bill 1265.  Act 161 of 2016 (the "Act") amends the Pennsylvania Wage Payment and Collection Law (the "WPCL") and allows employers to pay wages and other compensation via the use of debit cards commonly called payroll cards. This Act, which takes effect on May 3, 2017, supersedes previous case law which held that the use of payroll cards violated the WPCL.

There are some very important employee protections embedded in the Act. For example, the decision to accept payment via a payroll card must be authorized in the writing or electronically by the employee. Additionally, receipt of wages or other compensation via payroll card cannot be made a condition of employment in any way. An employee also must be permitted at least one free withdrawal and one free ATM withdrawal for each payroll period, or weekly, if the employee is paid more frequently than weekly.

Before an employer may shift employees to payment by payroll card, an employer must provide its employees with "clear and conspicuous notice" of the following information:

  • All of the employee's payment options (i.e., check, draft, cash, etc.);
  • The terms and conditions of payroll card option, including any fees to be charged by the card issuer;
  • A notice that third parties may assess fees in addition to an issuer fees; and
  • The methods available to the employee for accessing wages without fees.

Regarding fees, the Pennsylvania Legislature has prohibited many of them, including any fees relating to:

  • the application, initiation or privilege of participating compensation via payroll card;
  • the original issuance of the payroll card or any employee-requested replacements (up to one per year);
  • the process of placing wages, salary or other compensation into the payroll account;
  • purchase transaction at a point-of-sale; and
  • nonuse or inactivity during the first 12 months after compensation is transferred onto the payroll card account.

An employee must also be provided with manner of determining a card's balance without cost. Importantly, compensation transferred to a payroll card cannot expire.

There are several more requirements to the Act. I would encourage all employers, franchisors and franchisees alike, considering utilizing voluntary payroll cards after the Act becomes effective on May 3, 2017, to review its terms, and any regulations or guidance issued by the Department of Labor and Industry respecting it. At long last, however, the question of the use of payroll cards in Pennsylvania has been put to rest. So long as employers practice careful adherence to the law, payroll cards will soon be legal in Pennsylvania.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.