New Payroll Law in Illinois Effective Jan. 1, 2015 (Aug. 7, 2014)
Paybefore typically confines discussions about state legislative and regulatory activity to the State Tracker section of Pay Gov. But after we published Pay Gov yesterday, Illinois passed a law that explicitly allows payroll cards in the state, subject to certain conditions. We’re breaking form and providing details here, because the payroll card discussion in Illinois has been intense, and some have been concerned that the tough restrictions in earlier drafts of the bill might influence other states. The new Illinois law is effective Jan. 1, 2015.
Here are the details: The conditions IL H 5622 , which amends the Illinois Wage Payment and Collection Act, places on payment of wages via payroll card include: (i) requiring certain disclosures (including all fees and notice that third parties may assess transaction fees), (ii) the option of receiving wages by check or direct deposit and (iii) voluntary written consent from the employee. The law requires payroll card programs to offer: (i) at least one fee-free ATM withdrawal per pay period of the full balance on the card at a location within a reasonable distance of the place of employment, (ii) one free transaction history each month at the employee’s request and (iii) a reasonable free method to obtain the card account balance at any time. It restricts certain fees, such as fees for declined transactions; POS transactions; or the application, initiation, loading of wages by the employer or participation in the payroll card program, and it prohibits linking payroll cards to any form of credit. Inactivity fees are permitted in the passed version of the law after one year of inactivity.
Margo Hirsch Strahlberg, senior associate at Bryan Cave LLP, advises payroll card issuers that offer payroll cards to Illinois employees to carefully review their payroll card programs to confirm compliance with the new law. In particular, she suggests that issuers pay special attention to the new law’s fee prohibitions and restrictions, and she notes that all fees must be disclosed in the terms and conditions.