Payment of New York State Wages Rule Revoked

We’d like to give a quick heads up that the New York State (NYS) Industrial Board of Appeals has revoked the entire new direct deposit/payroll debit card rule because it encroaches on the jurisdiction of the banking and financial services regulators and they claim that NYS Commission of Labor exceeded his authority.  Below is the text of the BCNYS alert:

ALERT: Payment of Wages Rule Revoked

In our last Update we discussed the impending NYS Department of Labor rule regarding the “method of payment of wages.”  As you recall, this rule imposed significant new restriction on the use of refillable payroll cards as a method of payment of wages.  It also required all employers who pay their employees by direct deposit to provide a notice to employees of their rights under the labor law.  This notice was to be given to employees prior to the rules effective date:  March 7, 2017.

On February 16th, the State’s Industrial Board of Appeals revoked the entire rule, which has been challenged by a payroll card provider.  As a result of the IBA’s decision, employers are relieved of the new obligations regarding payment of wages by payroll card, and employers who use direct deposit will not be required to distribute any kind of notice of rights to their employees by March 7th.  The entire rule has been revoked.

In short, the Industrial Board of Appeals - created by the Legislature in 1975 as an independent review agency with the primary duty of reviewing the validity and reasonableness of certain rules, regulations or orders issued by the Commissioner of Labor – found that the Commissioner exceeded his “rulemaking authority and encroached upon the jurisdiction of the banking and financial services regulators.”   The Department may appeal the ruling.  The Department of Financial Services may act to create their own rule.  Or the Legislature may act.  We will monitor each of these initiatives. 

But for the foreseeable future, there is no need to make any changes, or take any actions as a result of the DOL’s rule as to how your employees are paid.  The entire rule has been revoked.

Here is a copy of the decision itself: http://industrialappeals.ny.gov/decisions/pdf/pr-16-120.pdf

So for now, it appears there is no need to change current processes related to direct deposit and payroll debit cards. However, we’ll watch how things develop and let members know as we hear more.   

Kathy Richmond
Sr. Director, Human Resource Services
Greater Rochester Chamber of Commerce