Canadian Payroll Reporter

November 2016

Focuses on issues of importance to payroll professionals across Canada. It contains news, case studies, profiles and tracks payroll-related legislation to help employers comply with all the rules and regulations governing their organizations.

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News apply to payroll cards. The extent of the regulations in the U.S. varies, depending on the state. Some limit the fees that employers or payroll card provid- ers can charge employees while others only require them to no- tify employees of the amount of the fees they could incur. Work- ers' advocates say New York's new regulations will go beyond the rules in other states. "We commend the adminis- tration for adopting the nation's strongest rules reining in the payroll card industry and pro- tecting workers from coercion and unfair fees," said Deyanira Del Rio, co-director of the New Economy Project. The new rules in New York will prohibit employers or pay- roll card agents from charging employees fees for things such as loading a payroll card, check- ing their balance, maintaining an account, having an inactive account, contacting customer service by phone or online, or having an overdraft, shortage or low-balance status. The rules do not apply to in- dividuals employed in executive, administrative or professional roles who earn more than $900 a week or to employees working on a farm that is not connected with a factory. The new rules will also require employers to ensure that em- ployees have access to at least one automated teller machine (ATM) within a reasonable distance of where they work or live that does not charge fees for withdrawals. The regulations do not define "reasonable." Employers will have to give employees a list of the ATM lo- cations. The state's Labor De- partment says employers can meet this requirement by pro- viding employees with a link to a website that has a list of the ATMs or a way for employees to access a list. Employers will also have to provide employees with at least one way to withdraw up to the total amount of their pay- period wages or the balance remaining on the card without incurring fees. In addition, the new rules will prohibit employers from receiv- ing kickbacks or other financial compensation for using payroll cards. The department has said that it generally would not con- sider kickbacks to include indi- rect or incidental benefits that card companies provide to em- ployers for using them, such as volume discounts. "However, direct monetary payments or incentives from an issuer to an employer as a result of fees or revenues collected are prohibited," it says. Like some other states, New York will prohibit employers from making payment by payroll card a condition of employment. It will also require that employ- ers give employees other options for being paid, including cash, cheque and direct deposit. Employers will also have to give employees advance notice of their plan to use payroll cards and obtain employees' written or electronic consent to be paid by that method. The notice will have to include all of the options an employee has for receiving pay, a statement that the employer cannot require the employee to be paid by pay- roll card, a statement that the employee cannot be charged any fees for services required to ac- cess their full wages, and the list of ATMs. With the exception of provid- ing the ATM list, the new notice and consent rules will also apply to employers who want to pay their employees by direct depos- it. Employers will have to keep a copy of the employee's consent for direct deposit on file for six years after the last payment of wages that way. Employers will have to provide the notice to employees in Eng- lish, as well as in their primary language if the Labor Depart- ment provides a template for no- tice and consent in that language. Employers will also have to notify employees at least 30 days before making any changes to terms and conditions for a pay- roll card, including fee changes. While workers' advocates have applauded the new rules, busi- ness and payroll representatives have expressed concerns that they could discourage employers from using payroll cards. "Because of these broad fee restrictions, the cost of these services provided by the bank would be borne by the employer, and will certainly influence de- cisions on whether pay cards are an economically feasible option for an employer," said Catherine Tully, head of government af- fairs for The Business Council of New York State in commenting on the rules when they were in draft form. One new requirement of par- ticular concern is that employers will have to obtain employees' consent at least seven business days before beginning to use pay- roll cards to pay them. "This may cause confusion as companies must initially provide wages un- der a different method until the waiting period is complete," says The Business Council. The American Payroll Asso- ciation (APA) has said the new consent requirement could also be costly for employees. If em- ployers have to pay employees by cheque until the seven-day period is up, the association says employees could incur cheque- cashing fees. Despite the concerns raised, the Labor Department main- tains that the waiting period is necessary. "This period ensures that employees have the oppor- tunity to evaluate and assess the method of payment in a mean- ingful way without being limited in their ability to withdraw their consent immediately," it says. While the Labor Department did not make many changes to the rules from the time it pub- lished a draft of them in June to the final version posted in Sep- tember, it did soften its position of the need for employers to ob- tain updated employee consent for direct deposit or payroll cards. Published 12 times a year by Thomson Reuters Canada Ltd. 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No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, photocopying, recording or otherwise without the written permission of the publisher (Carswell, a Thomson Reuters business). Return Mail Registration # 1522825 | Return Postage Guaranteed Paid News Revenue Toronto Canadian Payroll Reporter is part of the Canadian HR Reporter group of publications: • Canadian HR Reporter — www.hrreporter.com • Canadian Occupational Safety magazine — www.cos-mag.com • Canadian Payroll Reporter — www.payroll-reporter.com • Canadian Employment Law Today — www.employmentlawtoday.com • Canadian Labour Reporter — www.labour-reporter.com See carswell.com for information November 2016 | CPR from NEW YORK on page 3 Changes will prohibit hidden fees to employees

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