OLR Bill Analysis

HB 5114 (as amended by House “A”)*

AN ACT CONCERNING PAYMENT OF WAGES TO EMPLOYEES BY PAY CARD.

SUMMARY:

This bill permits employers to pay their employees using a pay card system if the employee is given (1) at least one withdrawal per pay period with no fee and (2) the choice of another means of accessing funds that involve no additional cost to the employee.

Employers meeting the bill's requirements are not responsible for other account penalties or charges the employee incurs.

Some employers use a pay card instead of a check or a direct deposit system for employees who do not have checking accounts.

The bill defines “pay card” as a card issued by an employer or its payroll service provider to an employee that is linked to a payroll card account and credited with the employee's wages at the close of a pay period. A “pay card system” is an electronic pay arrangement in which an employee's wages are credited on a recurring basis to a payroll card account, established by the employer on behalf of the employee, that is subject to withdrawal charges and fees and where withdrawals may be made using a pay card at automatic teller machines (ATMs) or point of sale terminals.

The bill prohibits an employer from requiring an employee to receive wages through direct deposit or a pay card system in lieu of a negotiable check unless the employer meets the pay card criteria of the bill.

*House Amendment “A” (1) permits an employer to use a pay card system if it gives the employee (a) at least one withdrawal per pay period with no fee and (b) the choice of another means of accessing fund that involves no additional cost to the employee; (2) removes the requirement that the employer reimburse the employer for ATM withdrawal fees; (3) permits pay card use at point of sale terminals; (4) removes references to “debit cards”; and (5) makes clarifying changes.

EFFECTIVE DATE: October 1, 2008

COMMITTEE ACTION

Labor and Public Employees Committee

Joint Favorable