Illinois to recognize payroll cards as proper wage payment method

In the business marketplace, more employers are starting to get on the bandwagon of offering direct deposit payroll cards as a way to pay their employees. It is a way to offer workers greater financial access and inclusion by essentially offering electronic payment options to those that do not have a back account. 

According to a recent article from The National Law Review, the Illinois Legislature has recognized payroll cards as a legitimate method of wage payments.

House Bill 5622 amends the Illinois Wage Payment and Collection Act (IWPCA) to expressly mention payroll cards, something that was not explicitly mentioned before. As currently written, the IWPCA only recognized cash, check and direct deposit. Last year, the Illinois Department of Labor issued a report that interpreted the act to allow for payments through payroll cards if employers met several factors including making participation voluntary.

The new bill removes the interpretation from the IWPCA to lay out specifics about payroll cards to make sure that neither the employer or employee is taken advantage of. Part of the bill is a section that lays out a series of requirements employers must meet that include:

  • Employers must offer the option of cash, check, direct deposit and obtain voluntary consent to receive wages via payroll card
  • Employers must provide written disclosure of terms and conditions prior to initiating
  • Employees must receive at least one method of withdrawing their full wages from the payroll card every two weeks without incurring a fee.

There are also a number of additional provisions that employers need to meet to be fully compliant with this payment method.

by Ty Hardison

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