BILL ANALYSIS Ó
AB 51
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ASSEMBLY THIRD READING
AB 51 (Yamada and Carter)
As Amended May 31, 2011
Majority vote
LABOR & EMPLOYMENT 5-1 BANKING & FINANCE 7-4
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|Ayes:|Swanson, Alejo, Allen, |Ayes:|Eng, Fong, Gatto, Roger |
| |Furutani, Yamada | |Hernández, Lara, Perea, |
| | | |Torres |
|-----+--------------------------+-----+--------------------------|
|Nays:|Miller |Nays:|Achadjian, Fletcher, |
| | | |Harkey, Morrell |
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APPROPRIATIONS 11-5
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|Ayes:|Fuentes, Blumenfield, | | |
| |Bradford, Charles | | |
| |Calderon, Davis, Gatto, | | |
| |Hall, Hill, Lara, | | |
| |Mitchell, Solorio | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Harkey, Donnelly, | | |
| |Nielsen, Norby, Wagner | | |
| | | | |
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SUMMARY : Authorizes employers to pay employee wages by means of
payroll cards that meet certain specified conditions. Specifically,
this bill :
1)States that notwithstanding current law, an employer may pay an
employee's wages through a payroll card program, provided that all
of the following requirements are satisfied:
a) The employer has obtained the employee's voluntary written
consent to receive wages by payroll card, and provides
specified information;
b) The employer has not made participation in the payroll card
program a condition of hire or continued employment;
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c) The employer has offered the employee the option of
receiving payment by direct deposit or paper check;
d) The payroll card contract the employer has entered into with
the issuer requires that the issuer provide the employee, at no
cost to the employee, specified information;
e) The payroll card contract does not provide for an employee
to be charged specified fees;
f) The payroll card account may be closed for inactivity only
as specified;
g) The payroll card account is not linked to any form of
credit, including a loan against future wages or a cash advance
on future wages;
h) The employer honors a request by the employee to change the
method of receiving wages from the payroll card account to
another method that is allowed by law, within two pay periods
from the time of the request;
i) The payroll card account is insured by the Federal Deposit
Insurance Corporation or the National Credit Union
Administration on a pass-through basis to the employee; and,
j) The payroll card account complies with all applicable
federal law related to direct deposit, as specified.
2)Authorizes the Division of Labor Standards Enforcement to create
and enforce further regulations regarding payroll card wage
payments that are consistent with these requirements.
3)Specifies that provisions of existing law related to the provision
by the employer of an accurate itemized wage statement apply to
payment by payroll cards.
4)Makes other related and conforming changes.
FISCAL EFFECT : According to the Assembly Appropriations Committee,
administrative enforcement costs in the $150,000 range.
COMMENTS : Payroll cards or "pay cards" (also referred to as
"stored-value cards") were introduced in the last decade, but have
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seen an increase in recent years as companies such as Visa and
MasterCard began offering their own versions of the service.
California law currently only expressly allows for three types of
payment for employment: cash; check; and, direct deposit
(California Labor Code Sections 213 and 226). The California Labor
Code does not expressly allow nor restrict the usage of pay cards,
or stored value cards, in compensating employee wages.
The author states that current California Law is silent on the use
of payroll cards. Therefore, it is unclear what protections, if
any, exist for employees receiving their wages by payroll card; what
standards, if any, exist for the use of a payroll card program for
an employer; or, if the payroll card method is a legal method for
paying employee wages in California. This uncertainty has resulted
in the numerous fee problems for employees and many issues for
employers as well.
Given that there is not a definitive statute that addresses the use
of payroll cards, only the courts can determine the legal boundaries
of the payroll card method of payment. Disputes over payroll cards
and their use are restricted to resolution through civil suits.
This makes restitution for the employee and employer defense against
spurious claims, a costly recourse for both parties.
Therefore, the author argues that this bill solves these problems by
establishing clear guidelines for employers that also protect
employees from excessive fees. This bill would also clarify that
the payroll card method for the payment of employee wages is legal
in California
Opponents contend that the use of payroll cards is already valid and
lawful under California law. Similar to other alternative methods
of payment, such as direct deposit, an employer must simply obtain
the employee's un-coerced consent, provide at least one withdrawal
of the wages from the card without any fees, and provide an itemized
wage statement.
Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091
FN: 0001163
AB 51
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