BRONX LEGAL SERVICES
NEW ECONOMY PROJECT
RESTAURANT OPPORTUNITIES CENTER – NEW YORK
RESTAURANT OPPORTUNITIES CENTER UNITED
RETAIL ACTION PROJECT
RETAIL, WHOLESALE & DEPARTMENT STORE UNION
WESTERN NEW YORK COUNCIL FOR OCCUPATIONAL SAFETY & HEALTH
Our organizations commend New York State Governor Cuomo and the NYS Department of Labor for adopting critical new payroll card regulations that protect workers’ hard-earned wages. An estimated 13,000 businesses in New York State pay approximately 200,000 workers through payroll cards. New York’s wage laws have not kept up with the proliferation of the cards, and studies have shown that low-wage workers often end up paying high and hidden fees to access their own wages, among other problems.
New York State’s new rules — the strongest of their kind in the country — ban payroll card fees that unfairly deplete workers’ wages. The rules also prohibit employers from forcing workers to use payroll cards, among other protections.
Our working group of community, labor, and civil rights groups have for years called on NYS to crack down on the payroll card industry, as a matter of economic justice. We have exposed how financial institutions issue and profit from payroll cards, and how they market the cards to employers as a way to save on payroll expenses. Meanwhile, low wage workers who can least afford it bear the brunt of high fees and other abusive practices.
“Payroll cards have enabled some of New York’s biggest private companies to shift costs to low-wage workers, through exploitative and hidden fees,” said Deyanira Del Rio, New Economy Project’s Co-Director. “Not surprisingly, big banks issue and profit from payroll cards that deplete workers’ wages – another way that Wall Street exploits and extracts wealth from low-income people and communities. We commend the administration for adopting the nation’s strongest rules reining in the payroll card industry and protecting workers from coercion and unfair fees.”
In a 2014 survey conducted by New Economy Project, NYPIRG and Retail Action Project, low-wage workers with payroll cards reported being hit with multiple fees, including inactivity, maintenance, customer service, and point-of-sale fees, as well as fees to check their balances or to request a paper statement. Nearly one in four workers was charged overdraft fees ranging from $5 – $30, despite the fact that payroll cards are marketed as a way to avoid costly bank overdraft charges. And one in two workers said their employers did not offer them a choice of how to receive their wages – a violation of state and federal laws.
“When methods of payroll payment actually take money from workers through fees, we see how much the entire system is based on various forms of wage theft,” said Stuart Appelbaum, President of the Retail, Wholesale and Department Store Union. “For years now banks and employers colluded on payroll card agreements and fee schedules depleting workers’ wages through high and hidden fees. We commend the governor for these new strong rules that ensure workers have fair and direct access to their wages.”
“The new rules are an essential protection for workers against employer and credit card company abuse,” said Marshall Bertram, Coordinator at the Western New York Worker Center (WNYCOSH). “Workers using payroll cards are often not given a real choice of how to receive their wages and are nickel-and-dimed by an opaque and extensive fee scheme. And in Buffalo, the country’s third poorest city, this affects a larger percentage of workers’ wages.”
“The use of payroll cards in the restaurant industry allows large employers to cut administrative costs, while card companies can enjoy lucrative profits by charging workers simply to access their own wages,” said Saru Jayaraman, Co-Founder and Co-Director of ROC United. “New York’s new rules will ensure that payroll cards are offered as one of several ways for workers to safely receive their wages, rather than be used as a vehicle for steering employees towards accounts with hidden costs and excessive fees.”
We applaud the administration for its leadership, and we look forward to working with the NYS Department of Labor to ensure strong enforcement of the new rules.