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Ill.: State Amends Wage Act to Allow Use of Payroll Cards

By Susan R. Heylman  8/26/2014
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After Jan. 1, 2015, Illinois employers may pay employees’ wages with payroll cards in addition to paying by cash, check, or direct deposit into a bank account. The change is the result of an amendment to the Illinois Wage Payment and Collection Act made by House Bill 5622, which was signed into law by Governor Pat Quinn on Aug. 6.

A payroll card is provided to an employee by an employer or other payroll card issuer, such as a bank, financial institution, or other entity, which issues a payroll card to the employee under an employer payroll card program. The employer deposits the employee’s wages in the payroll card account, and the employee withdraws his or her wages from that account.

Employer Requirements

Under the payroll card amendment (codified at 820 Ill. Comp. Stat. 115/14.5), an employer using a payroll card to pay an employee’s wages may not make the delivery of wages by payroll card a condition of employment or a condition for the receipt of any benefit or other form of remuneration for any employee.

The employer cannot start the payment of wages to the employee by a payroll card account unless: 

∙ The employer provides the employee with a clear and conspicuous written disclosure notifying the employee that payment by payroll card is voluntary, listing the other method or methods of payment offered by the employer, and explaining the terms and conditions of the payroll card account option. The notice must include an itemized list of all fees that may be deducted from the employee’s payroll card account by the employer or the payroll card issuer and notice that third parties my assess transaction fees in addition to the fees assessed by the payroll card issuer.

∙ The employer offers the employee another method or methods of payment, as provided by the wage act.

∙ The employer obtains the employee’s voluntary written or electronic consent to receive the wages by payroll card.

Payroll Card Requirements

The payroll card program offered by the employer must provide the employee with at least one method of withdrawing the employee’s full net wages from the payroll card once per pay period, but not less than twice per month, at no cost to the employee and at a location readily available to the employee.

The program may not charge the employee for a declined transaction until the employee makes more than two declined transactions. Then, a commercially reasonable fee may be assessed on subsequent declined transactions within that particular month.

In addition, employers may not use a payroll card program that charges the employee fees for point of sale transactions, for the loading of wages by the employer, or for participation in the program. A fee for account inactivity may be assessed only after one year of inactivity.

Susan R. Heylman, J.D., is a freelance legal writer and editor based in the Washington, D.C., area.
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