The Modern Workplace

Many employers have implemented direct deposit payroll systems to reduce the transaction costs associated with paper payroll checks and the risks of the loss or theft of paper checks. A payroll card is an increasingly popular method used by employers to provide for the direct deposit of wages, particularly for employees without a deposit account at a financial institution. A payroll card is a debit or prepaid card onto which the employer loads an employees wages. The employee may then access those wages through withdrawals of cash at an ATM machine or by making purchases using the payroll card as a payment card.

Employers should be aware that payroll cards are subject to federal regulation under the Electronic Funds Transfer Act (EFTA) and Regulation E, which implements the EFTA.  Regulation E, among other things, requires that the employee receive certain disclosures concerning the fees associated with the payroll card, places limitations on the employees liability for unauthorized transfers using the payroll card, and provides error resolution procedures relating to the payroll card.