DEBIT/PAYROLL
CARD PAYMENT
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.
8-30-2005
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: http://www.nclabor.com
