Laws are like. better not to see. made.

Transcription

1 Electronic Wage Payments: The Legal Landscape

2 Paycards: The Legal Landscape Laws are like sausages. It s better not to see them being made. Otto von Bismark

3 Treasury Goes Green, Saves Green The benefits of electronic transactions ti are well documented. Aside from the cost savings, electronic transactions provide safety, convenience, and control for payment recipients, i taxpayers, and savings bond holders. Ti th G ith T Timothy Geithner, Treasury Secretary

4 Treasury Goes Green, Saves Green Treasury eliminates paper benefits payments Save more than $400 million 12 million pounds of paper in the first five years

5 Direct Deposit DD is employee benefit Can help promote savings Federal Reserve FDIC Comptroller of the Currency New America Foundation Consumer Federation of America

6 Benefits to Employees Instant access to full pay No check cashing fees No travel to retrieve paycheck Increased security Use of paycards at ATMs, POS and Online Access to more services 6

7 Benefits to Employers Lower check processing/distribution costs Eliminates costs for lost or stolen checks Eases compliance with wage payment laws Eases delivery of wages during natural disasters and inclement weather Transfer of escheatment responsibility Environmentally friendly 7

8 State Positions on Direct Deposit AK WA MT ND MN VT ME NH OR CA NV ID UT AZ WY CO NM SD NE KS OK TX WI IA IL MO AR MS LA NY MI PA OH IN WV VA KY NC TN SC GA AL MA RI CT NJ DE MD DC FL HI Mandate Opt out Voluntary

9 Direct Deposit: Split Deposit CFA study (2009) says 66% of employees receive pay by direct deposit 85% have access to direct deposit 78% of those with access use it Direct Deposit is good for employees Split deposits help with savings Opt-out rather than opt-in, where possible

10 Direct Deposit: Small Business NACHA study (2011) says 34% of small businesses offer direct deposit 83% of EEs with access use it 44% of small business EEs use DD Obstacles for ERs include: Cost Lack of interest Half of employees lack bank accounts

11 Paycards 2009 MasterCard/APA Study ~100% of APA members understand paycards ~50% of general population understands paycards Use doubled in five years 9% (2004) -18% (2009)

12 Paycards: APA Fundamental Principles Pi i 1. Paycards no more restrictive than direct deposit 2. Allowance to eliminate paper checks 3. Electronicwagestatements 4. Employee access to overdraft protection 5. Card transaction histories in accordance with Regulation E

13 Paycards: Shared Principles 1. Full access to wages for free 2. Limit fees to cardholder 3. Clear terms and conditions 4. Multilingual instructions 5. Automated customer service, at no charge

14 Paycards: Shared Principles (cont d) 6. Not linked to abusive credit 7. FDIC- or NCUA-insured accounts 8. Cards shall not expire 9. Certain cards replaced for free 10. Direct deposit also offered

15 State Positions on Paycards AK WA MT ND MN VT ME NH OR CA NV ID UT AZ WY CO NM SD NE KS OK TX WI IA IL MO AR MS LA NY MI PA OH IN WV VA KY NC TN SC GA AL MA RI CT NJ DE MD DC FL HI Green = state law Light Blue = published opinion Yellow = state regulation Dark Blue = unofficial state position Orange = unregulated Pink = statutory change required

16 Common Requirements for Paperless Pay At least one means of accessing full wages each pay period at no cost Employee consent Training, or distribution of educational materials regarding the program Disclosure of potential fees Employee ownership of funds Compliance with state paystub laws 16

17 Recent Paycard Legislation Arizona HB 2151 Connecticut HB 6407 California AB 51 New Mexico HB 212/SB 156 New York AB 6894 Texas HB 667

18 Direct Deposit/Paycards PayChoice The ability of employers to offer employees the choice between direct deposit or paycard without offering a paper alternative 25 states allow PayChoice

19 Visa PayChoice* Strategy Map Green states t permit PayChoice White states don t permit PayChoice Yellow states with restrictive PayChoice AK WA OR NV CA MT ID UT AZ WY CO NM ND SD NE KS OK TX MN WI IA IL MO AR MS LA VT NY MI PA OH IN WV VA KY NC TN SC GA AL ME NJ DE MD DC NH MA RI CT 5/01/11 HI FL * PayChoice enables employers to mandate electronic disbursement of wages through direct deposit and payroll cards.

20 Limited PayChoice States with restrictions Florida DD can be made a condition of employment but not continued employment Iowa For employees hired after 7/1/2005 Virginia Paycards can be mandated for new hires after January 1, 2010

21 Electronic Paystub Delivery Written consent required: AZ, HI, WY Access to printed statement required: CA, CO, CT, DE, DC HI, IN, IA, KS, KY ME, MD, MA, MN, MT NJ, NM, NY, NC, ND OR, UT, VT, VA, WV

22 Questions?? Bill Dunn, CPP Senior Manager of Government Relations, APA

23 Thank You