Jeffrey Ruzal Quoted in “Payroll Cards Good Option for Paying Caregivers, but Restrictions Apply”

Private Duty Insider December 2014

Jeffrey H. Ruzal, Senior Counsel in the Labor and Employment practice, in the firm’s New York office, was quoted in Private Duty Insider, in “Payroll Cards Good Option for Paying Caregivers, but Restrictions Apply,” by Angela Childers.

Following is an excerpt (see below for a PDF of the full article):

Moving to payroll cards does come with a few restrictions. The Consumer Financial Protection Bureau, which has the authority to enforce violations of the Electronic Fund Transfer Act, cautions that employers  who plan to pay via payroll cards must provide employees with a choice in their payment method and inform them of any fees associated with payroll cards.

In addition, employers must be sure that they are contracting with a payroll card issuer that provides employees with access to account history, limits liability for unauthorized use and responds to account error complaints.

“Businesses often prefer to use payroll cards because they save money by simply loading the card electronically instead of cutting a check,” said Jeffrey Ruzal, a labor and employment attorney in the New York City office of Epstein Becker Green. “Employees, however, have been averse to payroll cards because of fees that have been deducted from their wages.”

While card providers differ, nominal fees may be charged for cards themselves, withdrawals and use of non-network ATMs.

Since 2013, legislators in 17 states have introduced payroll card legislation. On Jan. 1, 2015, laws governing payroll cards will take effect in Illinois and Nebraska. New York Attorney General Eric T. Schneiderman has proposed the Payroll Card Act to address what he calls “shortcomings in payroll card programs” to protect worker rights and unfair wage deductions.

Although California legislators were among the first in the country to introduce payroll card bills, Gov. Jerry Brown vetoed the legislation, calling it overly restrictive. Likewise, legislation to regulate the use of payroll cards failed in New Hampshire.

In states without guidelines, Ruzal advises employers to minimize their risk of liability by offering employees a choice on their method of payment, thoroughly disclosing all fees, penalties and costs associated with the card and allowing employees the choice to end their use of the payroll card as their method of payment at any time.

Tips for using payroll cards

  • Do your research. Know what the costs of the program will be, as well as penalties that can be incurred, Ruzal says. Agencies should also seek well-known and well-respected cards that have a wide ATM network. McAlpin recommends the TFG Card to private duty clients because there are no start-up costs or fees for agencies or caregivers. The American Payroll Association also maintains a list of recommended paycard providers at www.americanpayroll.org/pdfs/pto/bg_1404.pdf.
  • Check with legal counsel. Make sure the payroll card provider is complying with state law and consider adding an indemnification clause in the contract to protect yourself from lawsuits over fees, suggests Ruzal.
  • Communicate and communicate some more. “Like with anything, good communication is key,” Manbeck says. “Start off early, with a target date [for implementation] way off in the future. You cannot communicate enough.”

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