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A BILL TO BE ENTITLED
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AN ACT
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relating to the payment of wages by an employer through an |
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electronic transfer of funds to a payroll card account. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Chapter 61, Labor Code, is amended by adding |
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Subchapter G to read as follows: |
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SUBCHAPTER G. PAYMENT OF WAGES THROUGH PAYROLL CARD ACCOUNT |
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Sec. 61.151. DEFINITIONS. In this subchapter: |
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(1) "Fee" includes any fee, charge, surcharge, or |
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cost. |
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(2) "Offers a payroll card" includes: |
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(A) a direct offer of a payroll card to an |
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employee by an employer; and |
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(B) the distribution by an employer to employees |
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of material describing a payroll card program prepared by a payroll |
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card issuer other than the employer. |
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(3) "Payroll card" means a card issued to an employee |
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by an employer or other entity on behalf of the employer used to |
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access the employee's wages. |
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(4) "Payroll card account" means an account that is |
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established by an employer to pay each participating employee's |
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wages by making an electronic funds transfer to the account, and |
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under which the employee receives a payroll card to access the funds |
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in the account. |
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(5) "Payroll card issuer" means: |
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(A) an employer who issues a payroll card to an |
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employee; or |
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(B) a bank or other financial institution that |
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issues a payroll card to an employee on behalf of an employer. |
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Sec. 61.152. ELECTION TO PAY THROUGH PAYROLL CARD ACCOUNT. |
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An employer may elect to pay wages through an electronic transfer of |
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funds to a payroll card account established at a federally insured |
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depository institution. |
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Sec. 61.153. INITIAL DISCLOSURE TO EMPLOYEES. (a) Before |
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instituting a payroll card account program, an employer who elects |
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to use such a program shall provide to each employee a written |
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disclosure, in plain language, that describes all of the employee's |
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options regarding payment of wages. The disclosure must meet the |
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requirements of this section. |
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(b) The disclosure must state the terms of the payroll card |
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account option, including: |
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(1) a complete itemized list of all fees that may be |
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deducted from the employee's payroll card account by the employer |
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or payroll card issuer; |
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(2) that third parties may assess transaction fees in |
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addition to the fees assessed by the employee's payroll card |
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issuer; and |
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(3) for fees that may be deducted or charged by the |
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employer or payroll card issuer, the dollar amount of each fee. |
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Sec. 61.154. EMPLOYEE CONSENT REQUIRED. (a) An employer |
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who elects to use a payroll card account system may initiate payment |
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of wages to an employee by electronic funds transfer to a payroll |
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card account only after the employee has voluntarily consented in |
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writing to that method of payment. Consent to payment of wages by |
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electronic funds transfer to a payroll card account may not be a |
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condition of hire or of continued employment. |
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(b) The written consent signed by an employee under this |
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section must include the terms of the payroll card account. |
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(c) The employer must: |
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(1) provide a copy of the signed written consent to the |
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employee; and |
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(2) retain the signed written consent during the |
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period that the employer uses a payroll card account system |
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affecting that employee. |
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(d) As long as each employee is given a written form that |
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meets all the requirements of this section on which to provide |
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consent to payment through electronic funds transfer, an employer |
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may comply with the employee consent requirements of this section |
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by giving the employee the option of receiving wages through a |
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payroll card account, a direct deposit plan, or any other method |
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offered by the employer. |
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Sec. 61.155. NOTICE OF CHANGES. An employer who elects to |
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use a payroll card account system shall provide to each employee |
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participating in the system written notice of any change to any of |
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the terms of the payroll card account that includes an itemized list |
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of any fee that may have changed. |
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Sec. 61.156. USE OF EMPLOYEE INFORMATION. Unless the |
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employee consents in writing to the use, information generated by |
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the employee's possession or use of a payroll card or payroll card |
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account may only be used to process transactions and administer the |
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payroll card and the payroll card account. |
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Sec. 61.157. CHANGE IN METHOD OF PAYMENT. (a) An employee |
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who has consented under Section 6l.154 to be paid wages by |
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electronic funds transfer to a payroll card account may request |
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that the employer pay wages to the employee by another method |
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allowed by law and offered by the employer. |
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(b) The employee may make the request: |
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(1) on a written form provided by the employer; or |
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(2) if provided through the employer, through an |
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electronic format. |
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(c) Not later than the 30th day after the date of the |
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employee request, the employer shall begin payment of wages by the |
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method requested by the employee under Subsection (a). |
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Sec. 61.158. OPERATION OF PAYROLL CARD ACCOUNT. (a) An |
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employer shall provide each employee participating in the payroll |
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card account system with access to one free transaction history |
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each month, which must include each deposit, withdrawal, deduction, |
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or charge made by any person from or to the employee's payroll card |
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account. |
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(b) An employer shall provide each participating employee |
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at least one transaction per pay period at no cost to the employee |
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for an amount up to and including the total amount of the employee's |
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entire net pay, as stated on the employee's earnings statement. The |
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free transaction must be available to the employee on and after the |
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employee's regular payday. |
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(c) With the exception of the cost required to replace a |
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lost, stolen, or damaged card, an employer may not charge a |
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participating employee: |
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(1) any initiation, participation, maintenance, |
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loading, or other fee to receive wages payable in an electronic |
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funds transfer to a payroll card account; |
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(2) any inactivity or dormancy fee; or |
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(3) any fee for use of customer service. |
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(d) An employer may not deduct from a participating |
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employee's payroll card or charge to the employee any fee imposed by |
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the payroll card issuer that was not disclosed to the employee |
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before the fee was initiated. |
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(e) An employer who offers a payroll card account option to |
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an employee by using materials in a language other than English must |
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provide the written disclosure, written consent form, and all |
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payroll card account agreements required by this subchapter in the |
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other language. |
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Sec. 61.159. PAYROLL CARD ACCOUNT NOT CREDIT. (a) A |
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payroll card or payroll card account may not be linked to any form |
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of credit, including a loan against future pay or a cash advance on |
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future pay. |
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(b) The prohibition in Subsection (a) does not apply to: |
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(1) an inadvertent overdraft that occurs |
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notwithstanding procedures designed to avoid overdrafts; or |
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(2) overdraft protection on the payroll card account |
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that is specifically agreed to by the employee. |
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Sec. 61.160. DEPOSITORY INSTITUTION REQUIREMENTS. (a) An |
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employer, or another entity on behalf of the employer, may not issue |
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payroll cards other than from a federally insured depository |
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institution. |
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(b) The agreement between the employer and the depository |
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institution must specify that: |
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(1) the insured depository institution maintain |
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account records that disclose the existence of a custodial |
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relationship between the employer and the participating employees; |
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(2) the employer, the insured depository institution, |
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or any other third party maintain records that disclose the |
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identities of the actual owners of the funds and the amount owned by |
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each actual owner; |
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(3) the deposits must be owned by the named owner |
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listed in the account; and |
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(4) the insured depository institution may not allow |
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overdrafts on the payroll card, with or without a fee, unless |
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overdraft service is requested by the named owner. |
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SECTION 2. Section 61.016(a), Labor Code, is amended to |
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read as follows: |
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(a) An employer shall pay wages to an employee: |
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(1) in United States currency; |
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(2) by a written instrument issued by the employer |
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that is negotiable on demand at full face value for United States |
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currency; or |
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(3) by the electronic transfer of funds to: |
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(A) a direct deposit plan as described by Section |
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61.017; or |
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(B) a payroll card account established under |
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Subchapter G. |
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SECTION 3. Section 61.017, Labor Code, is amended by adding |
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Subsection (d) to read as follows: |
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(d) An employer may elect to pay wages to an employee |
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through a payroll card account system that uses electronic funds |
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transfer to deposit the wages in the employee's payroll card |
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account. An employer who desires to pay wages through a payroll |
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card account system shall comply with Subchapter G. |
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SECTION 4. This Act takes effect September 1, 2009. |