By: Hochberg H.B. No. 667

A BILL TO BE ENTITLED

AN ACT

relating to the payment of wages by an employer through an electronic transfer of funds to a payroll card account.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Chapter 61, Labor Code, is amended by adding Subchapter G to read as follows:

SUBCHAPTER G. PAYMENT OF WAGES THROUGH PAYROLL CARD ACCOUNT

Sec. 61.151. DEFINITIONS. In this subchapter:

(1) "Fee" includes any fee, charge, surcharge, or cost.

(2) "Offers a payroll card" includes:

(A) a direct offer of a payroll card to an employee by an employer; and

(B) the distribution by an employer to employees of material describing a payroll card program prepared by a payroll card issuer other than the employer.

(3) "Payroll card" means a card issued to an employee by an employer or other entity on behalf of the employer used to access the employee's wages.

(4) "Payroll card account" means an account that is established by an employer to pay each participating employee's wages by making an electronic funds transfer to the account, and under which the employee receives a payroll card to access the funds in the account.

(5) "Payroll card issuer" means:

(A) an employer who issues a payroll card to an employee; or

(B) a bank or other financial institution that issues a payroll card to an employee on behalf of an employer.

Sec. 61.152. ELECTION TO PAY THROUGH PAYROLL CARD ACCOUNT. An employer may elect to pay wages through an electronic transfer of funds to a payroll card account established at a federally insured depository institution.

Sec. 61.153. INITIAL DISCLOSURE TO EMPLOYEES. (a) Before instituting a payroll card account program, an employer who elects to use such a program shall provide to each employee a written disclosure, in plain language, that describes all of the employee's options regarding payment of wages. The disclosure must meet the requirements of this section.

(b) The disclosure must state the terms of the payroll card account option, including:

(1) a complete itemized list of all fees that may be deducted from the employee's payroll card account by the employer or payroll card issuer;

(2) that third parties may assess transaction fees in addition to the fees assessed by the employee's payroll card issuer; and

(3) for fees that may be deducted or charged by the employer or payroll card issuer, the dollar amount of each fee.

Sec. 61.154. EMPLOYEE CONSENT REQUIRED. (a) An employer who elects to use a payroll card account system may initiate payment of wages to an employee by electronic funds transfer to a payroll card account only after the employee has voluntarily consented in writing to that method of payment. Consent to payment of wages by electronic funds transfer to a payroll card account may not be a condition of hire or of continued employment.

(b) The written consent signed by an employee under this section must include the terms of the payroll card account.

(c) The employer must:

(1) provide a copy of the signed written consent to the employee; and

(2) retain the signed written consent during the period that the employer uses a payroll card account system affecting that employee.

(d) As long as each employee is given a written form that meets all the requirements of this section on which to provide consent to payment through electronic funds transfer, an employer may comply with the employee consent requirements of this section by giving the employee the option of receiving wages through a payroll card account, a direct deposit plan, or any other method offered by the employer.

Sec. 61.155. NOTICE OF CHANGES. An employer who elects to use a payroll card account system shall provide to each employee participating in the system written notice of any change to any of the terms of the payroll card account that includes an itemized list of any fee that may have changed.

Sec. 61.156. USE OF EMPLOYEE INFORMATION. Unless the employee consents in writing to the use, information generated by the employee's possession or use of a payroll card or payroll card account may only be used to process transactions and administer the payroll card and the payroll card account.

Sec. 61.157. CHANGE IN METHOD OF PAYMENT. (a) An employee who has consented under Section 6l.154 to be paid wages by electronic funds transfer to a payroll card account may request that the employer pay wages to the employee by another method allowed by law and offered by the employer.

(b) The employee may make the request:

(1) on a written form provided by the employer; or

(2) if provided through the employer, through an electronic format.

(c) Not later than the 30th day after the date of the employee request, the employer shall begin payment of wages by the method requested by the employee under Subsection (a).

Sec. 61.158. OPERATION OF PAYROLL CARD ACCOUNT. (a) An employer shall provide each employee participating in the payroll card account system with access to one free transaction history each month, which must include each deposit, withdrawal, deduction, or charge made by any person from or to the employee's payroll card account.

(b) An employer shall provide each participating employee at least one transaction per pay period at no cost to the employee for an amount up to and including the total amount of the employee's entire net pay, as stated on the employee's earnings statement. The free transaction must be available to the employee on and after the employee's regular payday.

(c) With the exception of the cost required to replace a lost, stolen, or damaged card, an employer may not charge a participating employee:

(1) any initiation, participation, maintenance, loading, or other fee to receive wages payable in an electronic funds transfer to a payroll card account;

(2) any inactivity or dormancy fee; or

(3) any fee for use of customer service.

(d) An employer may not deduct from a participating employee's payroll card or charge to the employee any fee imposed by the payroll card issuer that was not disclosed to the employee before the fee was initiated.

(e) An employer who offers a payroll card account option to an employee by using materials in a language other than English must provide the written disclosure, written consent form, and all payroll card account agreements required by this subchapter in the other language.

Sec. 61.159. PAYROLL CARD ACCOUNT NOT CREDIT. (a) A payroll card or payroll card account may not be linked to any form of credit, including a loan against future pay or a cash advance on future pay.

(b) The prohibition in Subsection (a) does not apply to:

(1) an inadvertent overdraft that occurs notwithstanding procedures designed to avoid overdrafts; or

(2) overdraft protection on the payroll card account that is specifically agreed to by the employee.

Sec. 61.160. DEPOSITORY INSTITUTION REQUIREMENTS. (a) An employer, or another entity on behalf of the employer, may not issue payroll cards other than from a federally insured depository institution.

(b) The agreement between the employer and the depository institution must specify that:

(1) the insured depository institution maintain account records that disclose the existence of a custodial relationship between the employer and the participating employees;

(2) the employer, the insured depository institution, or any other third party maintain records that disclose the identities of the actual owners of the funds and the amount owned by each actual owner;

(3) the deposits must be owned by the named owner listed in the account; and

(4) the insured depository institution may not allow overdrafts on the payroll card, with or without a fee, unless overdraft service is requested by the named owner.

Sec. 61.161. APPLICATION TO BANKS AND OTHER FINANCIAL INSTITUTIONS. A requirement or restriction imposed on an employer under Section 61.153, 61.155, 61.156, 61.158, or 61.159 applies to a payroll card issuer that is a bank or other financial institution as if the bank or financial institution were the employer.

SECTION 2. Section 61.016(a), Labor Code, is amended to read as follows:

(a) An employer shall pay wages to an employee:

(1) in United States currency;

(2) by a written instrument issued by the employer that is negotiable on demand at full face value for United States currency; or

(3) by the electronic transfer of funds to:

(A) a direct deposit plan as described by Section 61.017; or

(B) a payroll card account established under Subchapter G.

SECTION 3. Section 61.017, Labor Code, is amended by adding Subsection (d) to read as follows:

(d) An employer may elect to pay wages to an employee through a payroll card account system that uses electronic funds transfer to deposit the wages in the employee's payroll card account. An employer who desires to pay wages through a payroll card account system shall comply with Subchapter G.

SECTION 4. This Act takes effect September 1, 2011.