Office of Labor Law Enforcement
PUBLIC NOTICE
Wage Payment & Collection Act
Pursuant to the Department of Labor’s authority to promulgate regulations effecting Title 19, Chapter 11, under the Wage Payment and Collection Act at 19 Del.C. §§105, 114 and, in accordance with the procedures set forth in Title 29 Subchapter II, Agency Regulations at 29 Del.C. §10115, the public and interested parties are herein given NOTICE of the Department of Labor’s intent to consider whether PAYROLL DEBIT CARDS as a form of wage payment depicts suitable arrangements for cashing checks or voluntary programs for credit to employees’ bank accounts under the WAGE PAYMENT and COLLECTION ACT. Interested parties may submit written comments to the Department of Labor before January 26, 2004 at the address below or present views at public hearings which will be held on January 23, 2004 in New Castle County and on January 26, 2004 in Kent County at the locations below.
The Department of Labor has received inquiries from Delaware employers regarding the use of payroll debit cards for wage payment in lieu of checks or deposits to employee’s bank accounts. The Wage Payment and Collection Act recognizes wage payment in the form of checks – conveniently cashed without cost to the employee or credit to employees’ bank accounts. Employers suggest that payroll debit cards benefit employees because the process provides a safe and convenient form of payment without offending the Act. The process offers employers a less expensive form of payment than written checks issued to employees and gives employees more flexibility in cashing the wage payment.
In order to consider the issue of whether payroll debit cards are an acceptable and beneficial form of wage payment under the Act, the Department of Labor invites the public, interested parties, employers and employees to provide their views in writing or by attending a public hearing. Interested parties may provide written comments by methods described below.
1. submit written comments to the Director of Industrial Affairs James G. Cagle, Jr. at the Department of Labor, 4425 North Market Street, Wilmington, Delaware 19802 before January 26, 2004; and/or
2. express their views at a public hearing which will be held on January 23, 2004 at the Department of Labor Annex, 19 Lea Boulevard, Wilmington Delaware 19802 at 9:00 a.m.
3. express their views at a public hearing which will be held on January 26, 2004 at the Department of Health & Social Services Office, 18 N. Walnut Street, Milford, Delaware 19963 at 9:00 a.m.
If the Department of Labor finds payroll debit cards beneficial and acceptable as a form of wage payment under the Act, the Department will promulgate regulations identifying the standard for its use in Delaware. Under all circumstances, the use of payroll debit cards as a form of wage payment must comply with all conditions set forth in the Act including, but not limited to the following:
1. Employers must inform new employees in writing, at the time of hire, when the employer will fulfill the exchange rate obligations (§1108 (1));
2. Employers must pay the employee within 7 days from the close of the pay period for the work performed (§1102 (a));
3. Employers must pay the employee no less than once a month on a day designated in advance by the employer (§1102 (b));
4. Employers must pay the employee in legal tender of cash, check payable on demand, or by credit to the employee’s bank account when requested in writing by the employee (§1102(a));
5. Employers must pay the full wages owed on the regular payday and account for lawful deductions specified under §1107 and related regulations; and
6. Employers must provide a written record reciting the hours worked, hours paid, benefits accrued, lawful deductions, and any information for historical purposes effecting the wage arrangement for three years (§1108 (4) and (6)).
The Department of Labor has considered the following proposed language for Definitions and Regulations setting forth standards regulating the use of payroll debit cards by Delaware employers for wage payment under the Act.
Payroll Debit Cards
1.0 Definitions
1.1 ATM means the automatic teller machine activated by a magnetically encoded card and the transmission of a code which allows card holders to perform routine banking transactions including the withdrawal of cash.
1.2 Cash means lawful money.
1.3 Credit means the amount of money which is added to an employee’s bank account.
1.4 Demand Deposit Account means funds that an employee or card holder may withdraw from a bank with no advance notice usually by writing a check or using an automatic teller machine.
1.5 Direct Deposit means automatic deposit of wages or benefits into an employee’s bank account.
1.6 Exchange Rate means the rate agreed upon by the employer and employee as compensation for the performance of work by the employee.
1.7 Functional Equivalent means a change in the form of the payment of wages without impacting the substantive rights or value of the employee’s wages. For example, a debit card in lieu of cash, check, or credit must provide the full amount of wages without cost to the employee on the regular payday.
1.8 Payroll Debit Card is a card that provides an employee with the appropriate means of obtaining all wages earned in a defined pay period in a form that is the equivalent of payment by cash, check, or direct deposit.
1.9 Unbanked Employee means an employee who does not transact banking business under their own individual account.
2.0 Payroll Debit Card in Lieu of Cash or Check
Delaware’s Wage Payment & Collection Act requires the payment of wages to employees in lawful money or checks payable on demand, “provided suitable arrangements are made by the employer for cashing such checks for the full amount of the wages due at a bank or other business establishment convenient to the place of employment. Employers may comply with this requirement by issuing a payroll debit card which provides the functional equivalent of cash or a check. It is the employers’ responsibility to effectuate a payroll debit card system which will allow full payment of wages on the employee’s regular payday and without cost to the employee. Employers may use a pre-paid debit card or general payroll fund account to establish suitable arrangements for converting wages into employee’s disposable income.
3.0 Payroll Debit Card and Account Option for the Unbanked Employee
Delaware’s Wage Payment & Collection Act allows for, but does not require a voluntary program of automatic deposit or credit to a designated bank account of the employee. For employers who presently honor such a system, the employer may offer a similar option to unbanked employees upon the written request for the benefit of the employee who desires an individual bank account in their name. Employees are required to provide a written authorization to the employer for the transfer of wages into the individual bank account. All employees shall have notice that direct deposit into individual account programs are initiated and terminated by the employees’ written requests. Costs associated with accounts established for the unbanked employee who voluntarily participates in the payroll debit card individual account program must be reasonable under the circumstances.