Connecticut's Wage Payment Law to Catch Up With Technology
Currently on the table is a bill which would allow employers to require employees hired after October 1, 2011 to choose between direct deposit and a payroll card as their payment method, and which would also allow employers to provide employees with an electronic record of their hours worked, gross earnings, deductions, and net earnings, as long as (1) an employee can access and print it for free, and (2) it incorporates safeguards to ensure confidentiality. The full text of the bill can be found here. Unlike many other states, current law requires employers to pay their employees in cash or by negotiable check and only permits direct deposit if the employee submits a written request. Wage and hour information must currently be furnished in writing. This is surprising considering Connecticut already uses prepaid debit cards to deliver a variety of benefits including unemployment compensation.
Under the bill, as amended, a “payroll card” is a stored value card or other device, but not a gift certificate, used by an employee to access wages from a payroll card account. A “payroll card account” is one that an employer directly or indirectly establishes to transfer employee wages, salary, or other compensation, for the employee to access with a payroll card. In practice, the cards operate like debit cards. The bill sets forth numerous conditions for their use, such as notice requirements, allowing one free withdrawal per pay period, limiting fees, and requiring employers to provide employees with access to their account balances.
Proponents of the bill say it will not only decrease the cost to employers of providing paper checks, but will also allow employees to avoid costly check-cashing services and obtain their wages even when they are away from the workplace. One critic, the Connecticut Food Association, is concerned about the potential increase in “interchange fees” or the fees that banks charge retailers when consumers pay for their groceries with a debit card, while the Connecticut AFL-CIO voiced concerns about liquidity.