New Rules for New York Employers Who Use Direct Deposit

October 17, 2016

As the workplace becomes increasingly digitized, both employers and employees can benefit from the conveniences technology provides. In the realm of wages, electronic payment methods such as payroll debit cards and direct deposit would seem to make life easier. However, beginning on March 7, 2017, New York employers who use these methods to pay wages must comply with written notice and consent requirements.

Employers will be required to provide employees with a written plain language notice identifying all of the employee’s options for receiving wages, and advising employees that: (1) the employer may not require the employee to accept wages by payroll debit card or direct deposit; and (2) the employee may not be charged any fees for access to wages. If the employer offers a payroll debit card, the notice must include a list of locations where employees can withdraw wages at no charge within reasonable proximity to their home or workplace.

In addition to providing notice, an employer will be required to obtain an employee’s written consent at least seven business days before issuing payment via direct deposit or payroll debit card. Such consent may not be the product of intimidation, coercion or fear of adverse action by the employer for refusing to accept this form of payment. Further, employers cannot make payment by direct deposit or debit card a condition of employment. Employers must keep copies of the employee’s notice and consent for the duration of their employment and for a period of six years after the employer makes a final wage payment to the employee.