Paycards have grown in popularity as a means of compensating employees and as such, have courted the attention of regulators. The New York State Department of Labor (NYSDOL) has proposed guidelines for paycard implementation to make the process as fair to workers as possible. 

"For several years at least, many employers with a large non-exempt workforce – particularly in the retail and hospitality industries – have moved towards pay cards as a means to reduce payroll administration costs," explains JD Supra, business advisor. "Most states either regulate pay card systems lightly (with fairly minimal disclosure and free withdrawal requirements) or not at all."

Some of the NYSDOL-proposed regulations include:

• A description, in plain language, of all employee options for receiving wages.
• A statement that the paycard payment channel is not required.
• A statement that basic access to wages in full does not come with fees attached.
• A list of locations for access and withdrawal. These must be located within "reasonable proximity" of the employee's residence and place of work. 

The employer must also present a network of ATMs that offer free withdrawals, including at least one free withdrawal per pay period, and written statements that include a monthly balance and transaction history. 

Many of these proposed regulations are common-sense solutions that help employees, particularly those who are unbanked, access funds and gain insight into their current financial standing. Satisfying all those considerations could be a challenge for companies lacking the knowledge and expertise to launch a successful paycard program. 

As paycards become a more popular way to compensate employees, legislative standards stand to play a greater role in governing how they should be used. Staying up-to-date with those changing guidelines can be difficult without the assistance and support of a third party provider. For the tools and insight needed to implement an effective paycard system with respect to compliance and other considerations, contact Vantage today.