A new law has been signed that will allow employers to pay their employees with debit cards instead of paychecks or direct deposit.
The legislation, signed into law by Gov. Dannel P. Malloy, sets guidelines for how employers can use the cards. Employees, though, can’t be forced to accept them.
Employees have to expressly authorize, in writing or electronically, that he or she wishes to be paid with a card.
In addition:
- Employers must give employees the option to be paid by check or through direct deposit;
- The card must be associated with an ATM network that ensures the availability of a substantial number of in-network ATMs in the state;
- Employees must be able to make at least three free withdrawals per pay period;
- None of the employer’s costs for using payroll cards can be passed on to employees.
The Connecticut AFL-CIO offered cautious support for the legislation. Its president testified that card replacement costs and fees shouldn’t be charged to workers. Under the bill, employers are required to provide one free replacement card annually.
The Connecticut Bankers Association supported the bill because it served “unbanked” workers, which it said accounts for 25 percent of workers, not including undocumented workers. It said the average estimated cost to “unbanked” workers would be $78 per year compared to an estimated $1,100 annually using check cashing services.
