Understand Payroll Card Rules

Employers they can't require employees to receive wages exclusively on payroll cards.

November 19, 2013

CFPB Bulletin 2013-10 reminds employers they can't require employees to receive wages exclusively on payroll cards.

Payroll card accounts—established directly or indirectly through an employer—are used to receive a consumer’s salary, wages, or other employee compensation on a recurring basis.

Employees who have wages deposited onto a payroll card attached to these accounts are entitled to the protections of the Electronic Fund Transfers Act (EFTA), and Regulation E’s provisions applicable to payroll cards.

These protections include the right to disclosures, access to account history, limited liability for unauthorized use, and error resolution rights.

Reg E also states no “financial institution or other person” can mandate that an employee receive direct deposit into an account at a particular institution. This prohibits employers from mandating employees receive wages only on a payroll card of the employer’s choosing. The reg permits an employer to require direct deposit of wages by electronic means if the employee is allowed to choose the institution receiving the direct deposit.

Alternatively, an employer may give employees the choice to deposit their wages at a particular institution (designated by the employer) or receive their wages by another means, such as by check or cash. An employer can't require employees receive their wages by electronic transfer to a payroll card account at a particular institution. An employer may, however, offer employees the choice of receiving their wages on a payroll card or by some other means.

State laws might restrict how employers make wages available to their employees.

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