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It is the administrative enforcement position of the North Carolina Department of Labor's Wage and Hour Bureau that the payment of employees by "Debit/Payroll Card" is an acceptable form of payment for North Carolina employers as long as both conditions are met

1) The employee can withdraw all monies due on payday.
2) One-time use of the card by the employee on payday is at no cost to the employee.

More and more employers may elect this form of payment once banks solve the issue of "no-cost withdrawals" on payday.

Here are some Q&As:

1) If the card is optional (not required by the employer) and the fees are disclosed to the employee, may the Bank impose a monthly fee and a withdrawal fee for each withdrawal after the initial "no cost" withdrawal?

Yes, since the employer is not mandating the use of the debit/payroll card. In this context, the cards are used just as any other ATM/Debit Card and bank fees for transactions do not require an employer to obtain written authorizations from employees.

2) Please confirm that the following is correct: If the card is mandatory (required by the employer) an employee must receive his pay without reduction. This rule is satisfied if the bank allows five free withdrawals per month, which can be either ATM and/or teller withdrawals, at the election of the employee. If a monthly card fee is imposed by the bank, the employer must obtain the employee's consent to that fee. If a withdrawal fee is imposed for each withdrawal, the employee must consent to that fee. The amount of the fees need to be agreed to by the employee.

Partially correct. If the employee is provided five free withdrawals each month to coincide with weekly paydays, no employee authorization is required. The bank-imposed monthly fee cannot apply to the "one-time" withdrawal of all monies on payday. Subsequent withdrawals can be subject to "bank-imposed" fees and do not require any authorization from the employee by the employer since this is a contractual issue between the bank and the employee.

3) Compliance with both state and federal minimum wage law is a possible issue. If an employee is only making minimum wage, then it is understood that any bank fees could result in a minimum wage violation. However, if the card is optional, can any bank fees bring the minimum-wage employee below the minimum wage?

Yes. But if the card is not optional (it is a mandatory form of payment by the employer), then any bank fees cannot be passed on to a minimum-wage employee even if the employee pays these fees "out-of-pocket".

For questions or further information, call this office at (919) 807-2796 (Raleigh) or toll-free (NC only) 1-800-NC-LABOR (1-800-625-2267). Our Call-Center is open from 8:00 am to 5:00 pm, Monday thru Friday.


North Carolina Department of Labor
Wage and Hour Bureau
1101 Mail Service Center
Raleigh, NC 27699-1101
(919) 807-2796 or (toll-free NC only) 1-800-NC-LABOR
Web site:

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1101 Mail Service Center • Raleigh, NC 27699-1101 •  919-807-2796 or 800-NCLABOR