New Pennsylvania Law Clarifies The Use Of Payroll Debit Cards

On November 4, 2016, Pennsylvania Governor Tom Wolf signed into law a bill that brings the Commonwealth's law regarding payroll debit cards into the 21st century.  The new legislation amends Pennsylvania's Banking Code, and makes explicit that the use of payroll debit cards is permissible under the law of Pennsylvania, provided the employer and the bank issuing the payroll debit card comply with certain prerequisites.

Pennsylvania's Wage Payment Collection Law (WPCL), enacted in 1961, governs the timing and method of wage payments in Pennsylvania.  Most litigation under the WPCL has focused on the statute's timing provision, which requires that wages (typically) must be paid "within 15 days from the end" of a pay period. 

The statute's method provision, which mandates that "wages shall be paid in lawful money of the United States or check," has historically not received much attention.  As technological developments offered employers more options for paying wages, however, the method provision has become a focal point.  In particular, there have been several prominent cases over whether the use of payroll debit cards complies with the WPCL's method provision.  Considering that the use of payroll debit cards did not become possible or common until decades after the WPCL's enactment, lawyers sparred over whether, and under what circumstances, payroll debit cards are lawful.  At the risk of oversimplification, such disputes are the product of the law's struggle to apply 20th century legal principles to 21st century technology.

The new amendments resolve the uncertainty. Under the new law, the use of payroll debit cards is permitted if, among other things,

• the employer does not mandate the use of payroll debit cards;
• the employer complies with stringent notice requirements;
• the employee is allowed one free withdrawal of all wages earned per pay period;
• the employee is provided a free method of checking the balance on the card electronically or by telephone; and
• there are no fees for using the payroll card.

By explicitly providing that "[t]his act shall supersede any inconsistent provision of any other statute, rule or regulation," it is now understood that payroll debit cards can comply with the WPCL's method provision. The new legislation also provides clear guidance for how employers may use that method of payment.

Given the benefits of complying with the new law and its various notice requirements, Pennsylvania employers should obtain legal advice about whether their current payroll debit card programs comply with the new statute. 

The new law takes effect on May 5, 2017.

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