Written Consent
As of September 1, 2014, before an employer can use a pay card for the payment of wages, the employer must get written consent that an employee was offered a choice of being paid by check, direct deposit, or pay card, and that a written notice of the pay card rules for getting wages out without a fee, and what fees if any will be incurred if the card is used in circumstances outside the free parameters. The notice must be at least 10 pt font. Likewise, if an employee changes their mind, the employee must provide a written request to their employer to change their method of payment from pay card to another method and give the employer two pay periods to execute that change.
Three Free Withdrawals
Each pay period an employee must be able to make at least three free withdrawals from the pay card, one of which is equal to the net amount of wages due for that pay period. Previously, the declaratory order had only provided one free withdrawal where the whole amount could be withdrawn. This will likely require employers to set up local accounts that have local access to avoid fees at the ATM, but as we are not bankers, we also wait to see how this will work, and will keep you up to date on any new developments.
Ability to access balance of account 24/7
Employees must be able to access their balance by phone or by electronic means 24/7. This is one of the several requirements that will likely depend on how the employer sets up the pay card and the banking issues and agreements that are related to those issues.
21 days notice before changes to the pay card program
This is the first time a specific time frame has been identified for an employer to provide notice of changes to payment programs. In contrast, Section 388-7 (2), Hawaii Revised Statutes, (HRS) has only the requirement that notice be given "prior" to the change.
Pay statement and record keeping under Section 387-6, HRS is required.
Employers using pay cards are specifically required to follow the increased record keeping and pay statement requirements of Act 70, 2013, regardless of applicability to Hawaii Wage and Hour Law, Chapter 387, HRS. Hawaii Wage and Hour Law, is generally considered to apply to small businesses because if an employer's employees are subject to the Fair Labor Standards Act, they would be excluded from Chapter 387, except for minimum wage and overtime provisions. (See Section 387-1, HRS Definition of "employee" paragraph (12).) During the 2013 Legislative Session, Act 70, imposed additional pay statement and record keeping provisions that employers subject to Chapter 387, HRS were subject to follow. Guidelines on those provisions can be found on the Wage Standards web page.
The highlights that have been outlined above are items we perceive as important issues for enforcement of the law by the Wage Standards Division. There are additional details in the Act that employers should attend to when setting up their pay card programs with their banking associates. Employers must remember what hasn't changed is that employees must be paid their full wages earned. If fees and costs are charged to the employee outside the scope of the law or agreed upon fee schedule, it is the employer that will be responsible to reimburse the employee. It will be the employer's duty to work with the bank or other entity for any unauthorized fees charged to the employee.
It is apparent that pay cards have been working successfully for many employees. Here's hoping the provisions of Act 208, 2014 Session Laws of Hawaii, will make the cards even more useful to employees who have chosen them in the past and will assist employers in setting up pay card programs that help make wage payments in a timely and accurate manner.
