B2B Payments

State Supreme Court Revives NY Payroll Card Regulation Efforts

New York’s years-long payroll card regulation saga took an unexpected turn recently when the New York State Supreme Court annulled a previous appellate court ruling, reviving efforts to introduce stricter payroll card rules. Reports in The National Law Review on Monday (July 23) said the New York State Industrial Board of Appeals (IBA) ruling, issued in February of last year, was annulled by the state’s Supreme Court in Albany County.

The IBA had previously ruled against the New York State Department of Labor (NYDOL), which introduced rules on payroll cards in an effort to protect employees against excessive fees linked to the use of those cards. The NYDOL created rules that required employers to educate workers on payroll cards and how to use the tool without getting hit by fees. Employers would also have to receive consent from their workers to receive wages via payroll card.

At the time, though, the IBA said the rules were “invalid because they exceed rule-making authority.” The NYDOL appealed the decision in May of 2017.

Now, however, the state’s Supreme Court annulled the IBA’s decision, declaring it to be “arbitrary and capricious.” Depending on the outcome of the appeal, reports said, the payroll card regulations may come into effect. Reports noted that employers in the state will need to review their payroll policies in preparation for the potential regulations.

New York isn’t the only state in the midst of payroll card regulation debates. Legal action emerged in Pennsylvania in the form of a class action lawsuit, filed in 2015 against McDonald’s franchise owners. The case was settled last year, and similarly targeted payroll card fees.

Separately, states are beginning to consider regulation that targets fees associated with virtual cards used for B2B payments. Georgia’s General Assembly recently passed legislation that bars insurance providers from forcing healthcare providers to accept payment in the form of virtual cards, while Alabama also recently passed similar legislation.

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