B2B Payments

NY Effort To Regulate Payroll Cards Struck Down

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A board of appeals in New York state has revoked earlier regulations surrounding payroll cards developed by the New York State Labor Department after determining that the NYSDOL exceeded its rulemaking authority under the New York State Commissioner.

Reports in the National Law Review Tuesday (Feb. 21) said the New York State Industrial Board of Appeals ruled that the NYSDOL’s payroll card regulations are “invalid” and “revoked.”

“We find the regulations are invalid because they exceed rulemaking authority,” the board said, highlighting the fact that, of the at least eight bills introduced in New York state in recent years that apply to payroll debit cards, none have been enacted.

“The legislature’s failure to amend the statute demonstrates their satisfaction with the current statutory language or their inability to reach consensus on the manner in which payroll debit cards should be regulated under the Labor Law, if at all,” the Industrial Board of Appeals declared. The IBA added that the regulations “infringed on banking regulations that set fees banks may charge,” the publication wrote, and that the Labor Department overstepped its jurisdiction.

The DOL now has 60 days to appeal the decision, reports said.

New York state had introduced new efforts to regulate payroll card use by employers in 2015 aimed at protecting employees from high fees at ATMs to access their funds, among other challenges. The regulations would require employers to provide information to employees about the cards and their other options to receive payment and would require those employers to receive consent from employees using payroll debit cards.

The topic generated debate in the state. Bill Dunn, director of government relations at the American Payroll Association, described the regulatory efforts as a “solution without a problem,” while Bill Sullivan, senior director and group manager of government and industry relations at NACHA, described the rules as “really quite biased in favor of paper and particularly paper checks.”

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