ALEC Resolution Opposing Overregulation of Payroll Cards

ALEC Resolution Opposing Overregulation of Payroll Cards

Summary

Payroll cards provide a safe, convenient, and cost-effective method of wage payment for both employees and employers—bringing underserved citizens into the financial mainstream. Existing laws on payroll cards provide important consumer protections. This resolution opposes recent efforts to over-regulate payroll card laws, such as unreasonable mandates on employers to provide programs that require free banking services which will ultimately increase the cost of payroll card provision, reduce the likelihood of their use, and consequently, their benefits.

Model Resolution

WHEREAS, a payroll card is a reloadable prepaid card issued to an employee by or on behalf of an employer through a national or regional bank, credit union, or savings and loan association for the receipt of wages and other compensation; and

WHEREAS, a payroll card provides access to many fee-free financial services that would not otherwise be available to unbanked and under-banked employees; and

WHEREAS, payroll cards are one of the least expensive means for employees to receive their wages and provide underserved employees with a pathway into the financial mainstream; and

WHEREAS, private sector employers should be able to use this beneficial payment method that the Federal Government and a majority of States already understand the value of and use to deliver benefits payments as well as payroll; and

WHEREAS, payroll cards provide significant cost savings to employers by allowing them to transition to electronic payments and avoid the significantly higher costs associated with issuing paper checks; and

WHEREAS, payroll cards provide employers with a reliable means of providing employees payment even when unforeseen obstacles arise, such as natural disasters, employee illness and inclement weather; and

WHEREAS, payroll cards are already regulated in many states and consumers are afforded necessary protections and disclosures through existing laws; and

WHEREAS, [insert state here] has approved model policy enabling the use of payroll cards by employers with reasonable consumer protections; and

WHEREAS, efforts that impose restrictions beyond those set forth in the approved [insert state here] model policy and efforts that require unreasonable mandates on employers to provide programs that offer free financial services to unbanked employees would serve only to increase the costs and administrative burdens of providing payroll cards for both employers and payroll card providers, making them less likely to offer payroll cards.

THEREFORE BE IT RESOLVED, that [insert state here] opposes the enactment of laws that go beyond requiring full and free access to wages and that require employers and issuers to provide unreasonable free financial services to employees.

  Approved by ALEC Board of Directors on January 15, 2012.

Keyword Tags: Commerce Insurance and Economic Development Task Force, Financial Services, Regulation