Pillsbury Winthrop Shaw Pittman

New York AG takes a swipe at payroll cards

Employers and employees are increasingly turning to payroll cards, rather than paper pay cheques, to pay and receive their payrolls. However, a class action was filed recently in Pennsylvania challenging certain practices and it has been reported that New York’s attorney-general (AG) has initiated an inquiry about payroll card programmes used to pay New York employees.

Paying wages and other monies to employees using payroll cards is an increasingly attractive option for many employers and employees. Payroll cards can provide increased convenience to employees, who can enjoy the added advantage of a fast, convenient way to access their wages without the cost of using a cheque casher, the added security of having a personal identification number (PIN)-protected card and, for those who do not have a debit or credit card, the convenience of being able to purchase items over the phone or online. For some employers, the use of payroll cards can ease administrative burdens related to payment via checks. In 2012, according to the Aite Group, $34bn (£22bn) was loaded onto 4.6 million active payroll cards – these numbers are expected to reach $68.9bn and 10.8 million cards by 2017. However, some payroll card programmes have come under review in New York and are subject to a lawsuit in Pennsylvania…

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