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The New York State Department of Labor (NYSDOL) issued final regulations in September 2016, significantly restricting the use of payroll debit cards and imposing disclosure and consent requirements for direct deposit. The regulations (12 NYCRR §192) were to become effective on March 7. However, in a Feb. 16 decision, the New York State Industrial Board of Appeals (IBA) held the regulations "invalid" and "revoked."
"We find the regulations are invalid because they exceed [the NYS Commissioner's] rulemaking authority," the IBA held.
In striking down the regulations, the IBA noted that at least eight bills on payroll debit cards had been introduced in the New York state legislature in recent years, and none of the bills were enacted.
"The legislature's failure to amend the statute demonstrates their satisfaction with the current statutory language or their inability to reach consensus on the manner in which payroll debit cards should be regulated under the Labor Law, if at all," the IBA found.
The IBA also found the regulations infringed on banking regulations that set fees banks may charge and that the NYSDOL, by also seeking to regulate such fees, overstepped its jurisdiction. The NYSDOL has 60 days to appeal the decision.
While the IBA's analysis was focused on the proposed provisions regulating payroll debit cards, the regulations also established new requirements regarding use of direct deposit. Although the provisions regarding direct deposit were not addressed by the IBA, the IBA order revokes the entire regulation (12 NYCRR §192).
The regulations, which were scheduled to go into effect March 7, would have imposed greater obligations on New York employers if they wished to offer the option of wage payment through payroll debit cards and/or direct deposit including:
In anticipation of the effective date, the NYSDOL issued two model notice and consent templates, one for payroll debit cards and the other for direct deposit.
Under the regulation, previously signed direct deposit and payroll debit cards consent forms would remain valid, but employers would still need to provide written notice that complies with the regulation before March 7, including notification of the right to withdraw consent.
Beyond the notice and consent requirements, the additional restrictions applicable to using payroll debit cards included:
Separately, the NYSDOL issued regulations effective Feb. 1 implementing amendments to the New York equal pay law that made it unlawful for an employer to prohibit employees from inquiring about, discussing or disclosing their wages or the wages of other employees.
Jeffrey W. Brecher and Noel P. Tripp are attorneys with Jackson Lewis in Long Island, N.Y. Richard I. Greenberg and Daniel J. Jacobs are attorneys with Jackson Lewis in New York City. Jonathan M. Kozak is an attorney with Jackson Lewis in White Plains, N.Y. Vincent E. Polsinelli is an attorney with Jackson Lewis in Albany, N.Y. © Jackson Lewis. All rights reserved. Reposted with permission.
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