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Legislative Memo

Ken Pokalsky
Vice President of Government Affairs
T 518.465.7511
www.bcnys.org

BILL:

S.6288-A (Robach) / A.6894-A (Wright)

  Support

SUBJECT:

Payment of Wages by Pay Cards

 

S.6288-A (Robach) / A.6894-A (Wright)

DATE:

June 12, 2012

 

The Business Council supports this legislation which would permit employers to give their employees the option of electing to receive their wages via a debit card. Under current law, employers can pay their employees either with cash, check, or by direct deposit with approval of the employee. This added option will provide a safe, reliable, and for some workers, less expensive method for paying wages.

This legislation is particularly helpful to the many thousands of New York workers who are without checking accounts. Many forgo opening an account with a bank due to cost concerns of having an account, the inability to qualify for an account due to past banking misuse, cultural factors or other reasons. As a result, many of these “unbanked” citizens are forced to carry large amounts of cash and/or rely on check cashing services that usually assess significant fees, reducing hard earned wages.

This legislation would alleviate this check-cashing-fee problem by providing employees with a more efficient way to receive their wages, which they would be able to access at ATM’s or any bank location without having to pay any fees. Specifically, the bill provides that employees must be allowed at least one withdrawal or transfer from the payroll each and every pay period without charge for any amount up to and including the full amount of the employee’s wages. The bill also mandates that employees be provided a means to check their payroll card balance through an automated telephone system and by electronic means without charge.

This bill will help employers by allowing them to offer a less expensive, environmentally friendly way to deliver wages than paper checks. It will also provide financial institutions with a manner to deliver services to unbanked workers who have been left out of the financial mainstream.

As a nation, we are steadily moving away from cash and checks for a whole range of services. As example, the New York Department of Labor currently pays unemployment benefits via debit card, public assistance benefits are paid via debit card, and tax refunds and Social Security benefits are soon to follow. Using debit card payment is faster, cheaper, more reliable, and helps bring the unbanked into the financial mainstream.

For these reasons we strongly support the passage of S.6288-A (Robach) / A.6894-A (Wright).