The federal Consumer Financial Protection Bureau (CFPB) recently issued a bulletin reminding employers that they cannot require their employees to receive their wages on a payroll card of the employer’s choosing. Payroll cards and payroll card accounts allow an employer to deposit an employee’s wages directly into a bank account. The employee can then access the wages by using the payroll card, which is similar to a bank account debit card.
The federal Electronic Fund Transfer Act (EFTA) and Regulation E which implements it prohibit an employer from mandating that employees receive their wages only on a payroll card of the employer’s choosing. An employer may, however, offer employees the choice of receiving their wages on a payroll card or by some other means, such as direct deposit, paper check, or cash.
The CFPB bulletin also explains some of the consumer protections that the EFTA and Regulation E provide to payroll card users, such as fee disclosures, access to account history, limited liability for unauthorized transfers, and error resolution rights.
