Tax Credits

What payday looks like now—a costly change for many workers.

Hundreds of thousands of working New Yorkers just had the rug pulled out from under them. The New York State Department of Labor’s (DOL) long-awaited rules on payroll cards were scheduled to take effect this month. The rules would have shielded workers from having to pay unfair fees to access their own wages. But at the last minute, a state review board – the Industrial Board of Appeals (IBA) – sided with the payroll card industry and revoked the rules.

Labor and community groups across the state are now urging DOL to appeal IBA’s flawed decision in order to preserve these critical protections.

IBA stepped in when a California-based payroll card company named Global Cash Card petitioned to strike down DOL’s pro-worker rules. Incredibly, the review board decided that DOL – whose stated mission is “to protect workers” – lacked the authority to protect workers from payroll card abuses.

This is the latest twist in a long campaign by a statewide coalition of labor and community groups to end financial exploitation of low-wage workers at the hands of employers, banks, and other financial institutions.

Three years ago, New Economy Project, Retail Action Project (RAP) and the New York Public Interest Research Group (NYPIRG) surveyed mostly low-wage workers from throughout the state about their experiences with payroll cards. Nearly all of them told us they were hit with high and hidden fees – such as monthly maintenance, ATM, point-of-sale, and inactivity fees – that slashed their pay. Half said they were not even given a choice about how to receive their wages.

In 2015, at Gov. Cuomo’s direction, DOL proposed regulations to provide a much-needed check on the burgeoning and sparsely regulated payroll card industry. Besides protecting workers from a dizzying array of fees that cut into their earnings, DOL’s rules would prevent employers from forcing workers to accept wages by payroll card and ban kickbacks to employers from payroll card issuers.

Not surprisingly, banks and other financial institutions that profit from the cards have challenged these common-sense reforms at every turn.

Nearly $70 billion will be loaded onto payroll cards this year – a huge sum from which Wall Street can strip away hefty fees. That is why big banks like Citibank, major payment networks like Visa, and industry groups like the New York Bankers Association have all lobbied heavily in Albany, according to filings with the state’s Joint Commission on Public Ethics, to kill or severely weaken DOL’s rules.

Large employers have pushed back, too. Payroll card companies aggressively market the cards as a way for employers to save on payroll processing costs. For big box retailers like Walmart and The Home Depot, switching from paper checks to payroll cards can reduce administrative costs by millions of dollars. But make no mistake – those savings come out of workers’ pockets.

“It’s as close to wage theft as you can get, shy of them just taking money directly out of your check or deducting hours,” stressed Janika Lee Reyes, a long-time retail worker whose past experience with payroll cards forced her to have to keep a “work journal” to track her own hours so she knew how much should be in her paycheck and could track random deductions more accurately.

If allowed to stand, IBA’s ruling will undermine significant recent progress for working New Yorkers. Last year, the worker-led Fight for $15 movement won a landmark increase to the state’s minimum wage. That victory is now spurring additional pro-worker reforms here in New York and around the country. At the same time, profit-hungry financial institutions and employers continue to use payroll cards to shift the cost of payroll onto workers, effectively eating away at those gains.

Amid brazen attacks on federal worker and consumer protections, the move to revoke New York’s payroll card rules is an especially bitter pill for workers to swallow. The way payroll cards drain workers’ pay, New Yorkers literally cannot afford to wait any longer for these vital reforms.