generalassemblyPayroll cards are finally here.

The General Assembly finished their regular session last night with several employment law bills getting passed, including some that have been kicking around for years.

One of them is Senate Bill 211, which authorizes employers to use payroll cards — instead of checks or direct deposit — to pay their employees.

But there are a number of conditions that must be met before this happens and there are a number of restrictions as well.  The bill will become effective October 1, 2016 — assuming the governor signs the measure, which is expected.

The Office of Legislative Research has done a thorough recap, which I’ll liberally borrow from here.

In order to use the card, an employee must “voluntarily and expressly authorize, in writing or electronically, that he or she wishes to be paid with a card without any intimidation, coercion, or fear of discharge or reprisal from the employer. No employer can require payment through a card as a condition of employment or for receiving any benefits or other type of remuneration.”

In addition, as noted by the OLR report:

  1. employers must give employees the option to be paid by check or through direct deposit,
  2. the card must be associated with an ATM network that ensures the availability of a substantial number of in-network ATMs in the state,
  3. employees must be able to make at least three free withdrawals per pay period, and
  4. none of the employer’s costs for using payroll cards can be passed on to employees.

Under the bill, a “payroll card” is a stored value card (similar to a bank account debit card) or other device, but not a gift certificate, that allows an employee to access wages from a payroll card account. The employee can choose to redeem it at multiple unaffiliated merchants or service providers, bank branches, or ATMs. A “payroll card account” is a bank or credit union account (1) established through an employer to transfer an employee’s wages, salary, or other compensation (pay); (2) accessed through a payroll card; and (3) subject to federal consumer protection regulations on electronic fund transfers.

Another big change, according to the OLR report: The bill also allows employers, regardless of how they pay their employees, to provide them with an electronic record of their hours worked, gross earnings, deductions, and net earnings (i.e., pay stub). To do so, the (1) employee must explicitly consent; (2) employer must provide a way for the employee to access and print the record securely, privately, and conveniently; and (3) employer must incorporate reasonable safeguards to protect the confidentiality of the employee’s personal information.

Lastly, current law allows employers to pay employees through direct deposit only on an employee’s written request. The bill allows an employee’s request for direct deposit to also be an electronic request.

An amendment, which also passed, (1) changes the timeframe in which an employer must switch an employee from a payroll card to direct deposit or check; (2) specifies that the limit on fees or interest charged for the first two declined transactions each month applies to calendar months; and (3) requires the cards to be associated with ATM networks that ensure, rather than assure, the availability of in-network ATMs in the state.

Overall, this is a big boost for both employers and employees.  The CBIA had supported the measure and it had received “cautious” support from the AFL-CIO as well.

Back in July, the proposed Paycheck Fairness Act, whose lead sponsor is Connecticut’s own Rep. Rosa DeLauro, was still just being tossed around. At the time, I noted that there was criticism of the statistics being used to justify the law.

Now, numerous outlets are suggesting that the bill is close to passage (here, here and here.) Jon Hyman, of the Ohio Employer’s Law Blog, has previously provided this excellent recap of the five significant changes that employers should be aware of in this bill.  They include modifications to the defenses can use, enhanced damages, new non-retaliation provisions, changes from an opt-in to an opt-out class action status, and new reporting obligations. 

The topic is one that is of interest to our current Connecticut senators. In March 2010, Sen. Dodd held a hearing on the subject here.  For more background, you can see all of my posts related to the subject here. 

In the meantime, employers should keep tabs on this new legislative initiative.

— There are three kinds of lies: lies, damned lies, and statistics

                                                                                     —– Mark Twain

Given that Mark Twain is one of Hartford’s most famous residents (now "celebrating" 100 years since his death), it seems appropriate to invoke another one of his famous sayings.

Time and again, statistics keep getting raised to the forefront of public discourse. This time, it’s in the context of why we need the Paycheck Fairness Act — a proposed bill in Congress that I’ve discussed before.

Notably for those in Connecticut, the bill’s lead sponsor is Representative Rosa DeLauro (D-Conn3.)

This week, Stephanie Thomas — an economic and statistical consultant specializing in EEO issues — published a thought provoking piece about one statistic being raised in support of the bill:  that women still only earn 77 cents for each dollar earned by men.

As Stephanie notes, when most people hear that statistic, they assume that gender discrimination must be the reason for the difference. But Stephanie says that discrimination cannot be the reason when you look at the data.

She goes to the original source for the statistic and found that well over half of the difference can be explained by non-discriminatory factors:

[In the study, the researchers] found that 59% of the gender differential could be explained by non-discriminatory things: experience, chosen occupation, chosen industry, etc. So the "77 cents" statistic can’t be due to discrimination:

  • Estimated wage gap based on "77 cents" statistic = $0.23 per hour
  • Amount explained by nondiscriminatory factors = $0.14 per hour
  • Amount NOT explained = $0.09 per hour

According to [the study], the most that could be attributed to discrimination is $0.09 per hour. And this assumes that their model accounts for ALL legitimate nondiscriminatory factors.

She notes that there may be other reasons for the difference as well such as negotiating skills.

Of course, that’s not to say that there may not be yet compelling reasons for changes in the law. But as Stephanie is wise to point out — using this statistic as the basis isn’t one of them. 

(Photo courtesy of Library of Congress Flickr photostream)