BILL ANALYSIS �
SB 931
Page 1
SENATE THIRD READING
SB 931 (Evans)
As Amended August 31, 2011
Majority vote
SENATE VOTE : (vote not relevant)
PUBLIC EMPLOYEES APPROPRIATIONS
-----------------------------------------------------------------
| | (vote | |(vote not relevant) |
| |not relevant) | | |
-----------------------------------------------------------------
SUMMARY : 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:
i) A payroll card with no charges for application,
initiation, loading or participation;
SB 931
Page 2
ii) One replacement payroll card per year;
iii) 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;
iv) A minimum of four withdrawals per pay period from an
ATM within the network of the issuer;
v) The ability to withdraw the entire amount of wages
stored on the card, a minimum of once per pay period;
vi) 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; and,
vii) 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 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.
SB 931
Page 3
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.
FISCAL EFFECT : Unknown
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.
(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 sponsor 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
SB 931
Page 4
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 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.
This bill is very similar to AB 51 (Yamada) from this session,
which was already heard by this committee. AB 51 is currently
in the Senate Committee on Banking and Financial Institutions.
According to the sponsor, this bill reflects additional language
that has been negotiated in discussion with the opponents of the
original AB 51.
Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091
FN: 0002375