Payroll Card Legislation Signed into Law

Last week, Governor Quinn signed into law legislation that protects the wages of Illinois workers from the unfair and deceptive fees associated with payroll cards. The legislation was sponsored by Representative Art Turner and Senator Kwame Raoul and championed by Illinois Attorney General, Lisa Madigan, and the Illinois Department of Labor. IABG worked closely with our partners to advocate for a law that protects consumers while ensuring that workers have a choice. Illinois now has the strongest payroll card law in the country.

Payroll cards have been growing in popularity among employers over the last few years. Rather than paying employees with a check or via direct deposit into a bank account, employers are loading wages onto a payroll card. Payroll cards are particularly being used for workers that are unbanked.

Last fall, we hosted discussions around the state on the racial wealth gap and associated barriers that prevent families from reaching financial security. In each community we heard about the impact of payroll cards.

One story is that of Ida King, a POWER-PAC parent leader with Community Organizing & Family Issues (COFI). While working at a company in Chicago, Ida showed up to work one day and, instead of receiving a paper check, she was handed a payroll card. She wasn’t given a choice to be paid a different way and she was not given the card’s disclosure form. After using the card she began to notice that some of her wages were missing. She was being charged monthly fees, point-of-transaction fees, and additional ATM fees. When she called customer service to ask about these fees, they charged her for that call.

Ida shared her story at the bill signing that took place at COFI last week. “They were charging me all these fees but I wasn’t making that much money,” said Ida. “I am so happy to see this bill signed into law.”

Under this new law, workers have the right to:

1. Opt Out of the Payroll Card and Choose another Payment Method: Your employer must receive your written or electronic consent to pay you via a payroll card (see other options listed on the right). They MUST offer you the option to be paid with a paper check and/or direct deposit if you choose those options.
2. View Card Disclosure Forms: Your employer must give you written disclosure that includes information that the program is voluntary, that there are other payment options, and the terms and conditions of the payroll card.
3. Access Wages: You must be given at least one method of withdrawing all of your wages from the payroll card once per pay period, at an accessible location, with NO FEES.
4. Access Account Information: You must have access to at least one paper or electronic transaction history per month. The history should include all deposits, withdrawals, deductions, or charges by any entity from or to your payroll card.
5. Check Account Balance by Phone: You must have unlimited telephone access to customer service for questions.
6. Make Two Declined Transactions per Month: You must be given two free declined transactions each month. If there are more than 2 declined transactions on your card within one month, you may have to pay a “commercially reasonable” fee.

Fees may NOT be charged for:  

• Point of sale transactions (i.e. using your payroll card to purchase goods or services)
• Loading wages onto the card
• Monthly fees
• Overdraft fees or overdraft service fees

Workers should be warned that fees can be charged if your account is inactive for more than one year. Also, if you leave your job, the fees and features of your charge may change after 30 days.

The law goes into effect January 1, 2015. You can download a “Know Your Rights” fact sheet to share with workers in your community.