BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 931|
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VETO
Bill No: SB 931
Author: Evans (D), et al.
Amended: 8/31/11
Vote: 21
PRIOR VOTES NOT RELEVANT
ASSEMBLY FLOOR : 48-28, 9/8/11 - See last page for vote
SENATE FLOOR : 21-17, 9/9/11
AYES: Alquist, Corbett, De Le�n, DeSaulnier, Evans,
Hancock, Kehoe, Leno, Lieu, Liu, Lowenthal, Negrete
McLeod, Padilla, Pavley, Rubio, Simitian, Steinberg,
Vargas, Wolk, Wright, Yee
NOES: Anderson, Berryhill, Blakeslee, Calderon, Cannella,
Correa, Dutton, Emmerson, Fuller, Gaines, Harman, Huff,
La Malfa, Runner, Strickland, Walters, Wyland
NO VOTE RECORDED: Hernandez, Price
SUBJECT : Payroll cards
SOURCE : California Labor Federation
DIGEST : This bill authorizes employers to pay employee
wages by means of payroll card programs that meet certain
specified conditions.
Assembly Amendments delete the prior version of the bill
dealing with public employee organizations and insert
language that deals with payroll cards.
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ANALYSIS : Existing law prohibits an employer from
issuing in payment of wages due certain instruments,
including an order, check, draft, note, memorandum, scrip,
coupon, card, or other acknowledgment of indebtedness or
redeemable instrument, unless specified requirements are
satisfied.
This bill authorizes employers to pay employee wages by
means of
payroll card programs that meet certain specified
conditions. Specifically, this bill:
1. States that notwithstanding current law, an employer may
pay an employee's wages using a payroll card, if all of
the following requirements are satisfied:
A. The employee is presented with the option of
receiving his or her wages by direct deposit, the
option of receiving payment by paper check, and the
option of receiving payment by payroll card before
selecting one of the options;
B. The employer obtains the employee's written
consent to receive wages by payroll card and provides
specified information (including a payroll card fee
schedule);
C. The employer does not make participation in the
payroll card program a condition of hire or continued
employment;
D. The employer selects an issuer that offers
employees a process for disputing payroll card
account fees, as specified;
E. The employer honors a written request by the
employee to change the method of receiving wages
within two pay periods from the time of the request;
F. The payroll card contract provides for the
following, at no cost to the employee:
(1) A payroll card with no charges for
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application, initiation, loading or participation.
(2) One replacement payroll card per year.
(3) The ability to make at least one withdrawal
per pay period from an automated teller machine
(ATM) that is outside the network of the issuer,
without incurring a fee charged by the issuer.
(4) A minimum of four withdrawals per pay period
from an ATM within the network of the issuer.
(5) The ability to withdraw the entire amount of
wages stored on the card, a minimum of once per
pay period.
(6) The ability to use the payroll card for a
minimum of two point-of-sale transactions per pay
period, without incurring a fee charged by the
issuer.
(7) Additional specified information, including
periodic statements, transaction histories, online
and telephone access, as specified.
G. The payroll card agreement prevents withdrawals in
excess of the account balance, and, to the extent
possible, protects against the account being
overdrawn;
H. The funds in the payroll card account do not
expire, as provided;
I. 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; and,
J. The payroll card account is insured by the Federal
Deposit Insurance Corporation or the National Credit
Union Administration.
2. Provides that an employer that executes a payroll card
contract that complies with the above shall not be
liable for any fees charged to an employee (except in
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the event the issuer is also the employer). An employer
that pays employee wages through a payroll card and does
not comply with this requirement shall reimburse
employees for all fees charged by the issuer that are
inconsistent with the above requirements.
3. Provides that an employer shall be deemed to have timely
paid wages at the time the wages are deposited into the
payroll card account. If there is any delay in access
due to an error by the issuer, the employer shall not be
held liable for the delay as long as the employer timely
deposited the proper amount of wages.
4. Provides that a claim made by an employee against the
issuer shall not prohibit an employer from pursuing its
own claims or remedies it may have against the issuer.
5. Specifies that nothing in these requirements relieves an
employer of his or her obligations under existing law
related to accurate itemized wage statements.
6. Specifies that a payroll card contract entered into
before the effective date of this bill need not be
renegotiated to reflect these requirements until the
contract's expiration or renewal date, but in no event
later than January 1, 2013.
7. Makes other related and conforming changes.
Comments
Payroll cards or "pay cards" (also referred to as
"stored-value cards") were introduced in the last decade,
but have 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. (Labor Code Sections 213 and 226).
The Labor Code does not expressly allow nor restrict the
usage of pay cards, or stored value cards, in compensating
employee wages.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
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Unknown with latest amendments.
SUPPORT : (Verified 9/8/11)
California Labor Federation (source)
California Conference Board of the Amalgamated Transit
Union
California Conference of Machinists
California Employment Lawyers Association
California Professional Firefighters
California School Employees Association
California Teamsters Public Affairs Council
Engineers & Scientists of California, IFPTE Local 20,
AFL-CIO
International Longshore and Warehouse Union
Professional and Technical Engineers, IFPTE Local 21,
AFL-CIO
Service Employees International Union, Local 1000
State Building and Construction Trades Council
United Food & Commercial Workers Western States Council
UNITE-HERE, AFL-CIO
Utility Workers of America
OPPOSITION : (Verified 9/9/11)
Associated Builders and Contractors of California
Associated General Contractors
Bay Area Council
California Association of Bed and Breakfast Inns
California Bankers Association
California Chamber of Commerce
California Farm Bureau Federation
California Grocers Association
California Hispanic Chambers of Commerce
California Hotel & Lodging Association
California Independent Bankers Association
California Restaurants Association
California Retailers Association
Card Coalition
Civil Justice Association of California
Committee on Jobs
First Data
Golden Gate Restaurant Association
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Independent Maintenance Contractors Association
MasterCard Worldwide
Oakland Metropolitan Chamber of Commerce
Pacific Association of Building Service Contractors
Silicon Valley Leadership Group
TechNet
VISA
Western States Petroleum Association
ARGUMENTS IN SUPPORT : The bill's sponsor, the California
Labor Federation, 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 sponsor argues that this bill solves these
problems by establishing clear guidelines for employers
that also protect employees from excessive fees. This bill
also clarifies that the payroll card method for the payment
of employee wages is legal in California.
ARGUMENTS IN OPPOSITION : 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.
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GOVERNOR'S VETO MESSAGE:
"I am returning Senate Bill 931 without my signature.
Pay cards provide workers without bank accounts a way
of avoiding high check cashing fees. They are now used
by thousands of California employees and employers.
This bill seeks to contain costs for workers who choose
to accept pay cards, a goal with which I agree.
Unfortunately, this bill goes too far. It would impose
numerous and costly new requirements on pay card
providers. A likely result of these mandates is that
banks and employers may simply stop offering this
service, injuring the very workers this bill aims to
protect.
I strongly believe that reasonable protections are
needed for those who use pay cards. I will work with
the bill's proponents and the financial institutions to
forge a better solution that I can sign into law."
ASSEMBLY FLOOR : 48-28, 9/8/11
AYES: Alejo, Allen, Ammiano, Atkins, Beall, Block,
Blumenfield, Bonilla, Bradford, Brownley, Butler, Charles
Calderon, Campos, Carter, Cedillo, Chesbro, Davis,
Dickinson, Eng, Feuer, Fong, Fuentes, Furutani, Galgiani,
Gatto, Gordon, Hall, Hayashi, Roger Hern�ndez, Hill,
Hueso, Huffman, Lara, Bonnie Lowenthal, Ma, Mendoza,
Mitchell, Monning, Pan, Perea, Skinner, Solorio, Swanson,
Torres, Wieckowski, Williams, Yamada, John A. P�rez
NOES: Achadjian, Bill Berryhill, Conway, Cook, Donnelly,
Fletcher, Beth Gaines, Garrick, Grove, Hagman, Halderman,
Harkey, Huber, Jeffries, Jones, Knight, Logue, Mansoor,
Miller, Morrell, Nestande, Nielsen, Norby, Olsen, Silva,
Smyth, Valadao, Wagner
NO VOTE RECORDED: Buchanan, Gorell, V. Manuel P�rez,
Portantino
PQ:mw 1/4/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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