and Direct Deposit Regulations · NY IBA Invalidates New Wage Payment · Payroll Debit Card

NY IBA Invalidates New Wage Payment, Payroll Debit Card, and Direct Deposit Regulations

Copyright: andreypopov / 123RF Stock Photo

As my colleague Raquel Gutierrez warned last year, proposed wage payment regulations were set to become effective March 7, 2017. These regulations, created by the New York Department of Labor (“NYDOL”), would have caused new compliance headaches for New York employers. The proposed regulations placed specific notice requirements on employers to inform employees in writing of the methods by which they can receive wages. The regulations also would have implemented various restrictions with respect to payroll debit cards and direct deposits, most notably prohibiting certain financial services fees and requiring local withdrawal access. For the time being, employers needn’t worry about these proposed changes.

The New York Industrial Board of Appeals (“IBA”)—the intermediate administrative appellate body that oversees the NYDOL—has blocked implementation of these regulations by issuing a decision invalidating these proposed restrictions. The IBA found that the Commissioner of Labor overstepped her authority by, among other things, attempting to regulate issues that were truly the province of financial services regulations. For the moment, this alleviates at least one new administrative burden for the New York employer community.

However, please note that even though the NYDOL’s new regulations will not be implemented at this time, all existing laws and regulations regarding the payment of employee wages remain in effect. This includes, but is not limited to, requirements that employers obtain written authorization prior to paying employee wages by direct deposit or by payroll debit card, as well as restrictions on employers from charging fees or making deductions from wages. It is also possible that the NYDOL will submit alternate regulations in order to further its agenda.

As always, your friendly Fox Rothschild attorneys will monitor any new regulatory activity in this regard (or if the IBA’s decision is appealed further) and publish updates here or on our client alerts page.

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