Payroll cards are quickly becoming the preferred way businesses pay underbanked employees. It is quick, convenient, cost-efficient, and secure. Illinois is the most recent state to enact legislation to outline the terms of paycard payroll systems.
If you missed our other paycard legislation updates:
While Illinois had laws in place addressing payroll card use, a new law clarifies various provisions, including:
Employers cannot make payroll card adoption a condition of employment.
Employers cannot pay an employee via payroll cards unless they have given written notice of the following:
The payroll card program is voluntary
A list of all of the ways employees can receive their wages
An explanation of the terms and conditions of paycards, including all fees associated with using the paycard system, from either the employer or the third-party vendor issuing the cards
An explanation of how the employee can receive information about his or her wages, account balance, and paper or transaction electronic histories at no cost to the employee
3. Employees have the right to receive their wages via paper check or direct deposit payment.
4. Employers must honor requests for different methods of payment within two pay periods.
5. The payroll card program must be voluntary, and employers need written authorization from employees to pay them through a payroll card program.
According to the American Payroll Association, payroll card systems must provide certain services, including allowing users to withdraw their full net wages from the card one per pay period at no cost to the employee, and at a readily available location. Also, the paycard issuer must offer at least one account transaction history per month at no cost to the card user. Employees must be able to call for paycard balance at any time with no extra charge.
Employers are prohibited from using payroll card systems that charge fees for things like adding wages to the card, enrolling in the program, or point-of-sale transactions.
A payroll card cannot be linked to lines of credit, including service fees, cash advances or overdraft fees.
If an employee stops working for a company, the employer must follow the law for 60 days post-termination, and until the employee has received his or her final paycheck. The company must notify the card user within 30 days of termination that the terms and conditions of the paycard account could change going forward if he or she continues to use the card.
At SOLE, we believe in making payroll convenient for both the employer and employee. We offer easy sign-up online and the SOLE Visa Payroll card can be used for both debit and credit transactions at no extra cost. Employees can check account balances online or over the phone.
Our payroll card will cost an employer nothing to adopt and we provide free marketing materials in English and Spanish. Contact us today for more information on how we can support your un- or underbanked employees.