Employers can’t force debit cards on their workers

Employers can’t force debit cards on their workers

In its bulletin, the CFPB also reminded employers that workers who choose to receive their wages via payroll card are entitled to specific protections, including:

  • Fee Information: Any fees for electronic transfer of funds to or from the card must be clearly disclosed in writing and in a form the employee may keep.
  • Access to account information: The balance on the card must be available by phone. The 60-day account history (including any fees for fund transfers) must be accessible online as well as in writing, if requested.
  • Unauthorized use: The employee’s liability is limited as long as the unauthorized use is reported within a certain time period.
  • Error resolution: If the cardholder reports a payroll card error within a certain time period, the financial institution must respond.

N.Y.’s attorney general is on the case

New York Attorney General Eric Schneiderman is looking into whether payroll card rules are being broken in his state.

“No worker should have to accept a form of payment that reduces take-home pay and leads to hundreds of dollars in fees,” Schneiderman said in a statement to NBC News.

(Read more: How to complain about your bank)

This summer, Schneiderman’s office sent letters to 42 companies doing business in New York, including national retailers such as Best Buy, Costco, Home Depot, Sears, Walgreens and Wal-Mart, asking them to provide information about their payroll card policies and procedures. (A full list is at the bottom of this story.)

Payroll cards are not necessarily a bad way to get paid

The National Consumer Law Center (NCLC), which represents low-income consumers in the marketplace, believes payroll cards can benefit employers and offer unbanked workers “an economical, safe and convenient way to receive their wages” if the program is well-designed.

“For unbanked workers, payroll cards can mean no check cashing fees, greater security without the risk of cash, access to pay despite natural disasters and the ability to make purchases over the Internet and by telephone,” said Lauren Saunders, an attorney with the NCLC.

NCLC and the American Payroll Association recently issued a joint statement that spelled out best practices for employers. They include: using a card that is widely accepted, providing clear information about fees and training on how to best use the card, and allow workers to access their full wages in cash (without a fee) at least once each pay period.

*The New York Attorney General sent letters to: Abercrombie & Fitch, Ann Taylor, Bed Bath & Beyond, Best Buy, Big Lots, Burlington Coat Factory, CBS, Chipotle, Church’s Chicken, CKE Restaurants (Carl’s Jr., Hardee’s, Green Burrito and Red Burrito), Claire’s, Coach Leatherware, Costco, Cracker Barrel, Darden Restaurants (Red Lobster, Olive Garden, LongHorn Steakhouse, Bahama Breeze, Seasons 52, The Capital Grille, Eddie V’s and Yard House), Dollar Tree, DSW, Home Depot, Houlihan’s, Kohl’s, Limited Brands (Victoria’s Secret, Bath and Body Works, Pink, La Senza and Henri Bendel), Liz Claiborne, Long John Silver, Macy’s, Office Max, Payless, Petco, Ruby Tuesday, Sears, Staffmark, Starwood, Supervalu, Time Warner Cable, The Jan Companies (owns Burger King at 106 Fulton St. in NYC), TravelCenters of America, UNO, Walgreens, Wal-Mart, Wendy’s, White Castle, Yum! Brands (KFC, Pizza Hut and Taco Bell) and Zara.

—By CNBC contributor Herb Weisbaum. Follow him on Facebook and Twitter @TheConsumerman or visit The ConsumerMan website. The Associated Press contributed to this report.

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