12.02.14 |
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Managing the Increasing Complexity Surrounding Paycard Laws

ComplexityLast year, a McDonald’s employee in Pennsylvania filed a lawsuit against the franchise restaurant where she worked, citing that her paycard was deducting more than her net pay by imposing fees on a range of transactions from ATM withdrawals to being charged for checking her account balance2. When she asked if she could receive her pay another way, the franchise owner allegedly told her a paycard was the only option.1,2

The lawsuit spurred a larger debate over paycards and the regulations surrounding their use. According to a Bloomberg BNA report, 22 new bills regarding paycard use have been introduced this year throughout 17 states.

For employers, paycards present an opportunity to pay employees in a timely, consistent manner. Employees benefit because they can receive their pay in near real-time and use the card to pay immediate bills and other pending expenses electronically. However, with the rising number of laws regarding paycards, it’s important for employers to have a clear understanding of what the regulations are and how they may differ from state to state.

For example, in Colorado, the law states that an employer depositing wages onto a paycard must give employees free access to the entire amount of their net pay at least once per pay period or provide employees with the option of choosing and utilizing another authorized method for their wage payments.3

If you’re an employer in Hawaii, however, you must comply with a total of 12 requirements before issuing wages onto a paycard.4 The law indicates employers cannot make a paycard a condition of hire or continued employment, and also provides clear guidance on fees, which was one of the key points of contention in the McDonald’s case.

To help employers, the American Payroll Association has developed a portal that provides valuable resources focusing on paycards. Employers can turn to ADP for tools and wage payment products that can help them comply with the various state law requirements.

Learn more about the ADP SmartCompliance® Wage Payments module, which includes a paycard among its electronic pay options.




* The information provided in this blog post is for informational purposes only and not for the purpose of providing accounting, legal or tax advice. The information and services ADP provides should not be deemed a substitute for the advice of any such professional. Such information is by nature subject to revision and may not be the most current information available.


1McDonald’s Pa. Franchisee Backs Down on Debit-Card Only Payroll. ABC News. July 2, 2013

2Pa. woman sues McDonald’s store owners over prepaid debit card used for wages. New York Daily News. June 17, 2013

3 Colo. Rev. Stat. § 8-4-102(2.5)

4 Amendments to the Payment of Wages and Other Compensation Law. Act 208- 2014 Legislative Session.


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