September 8, 2016
COMMUNITY, LABOR, AND CONSUMER ORGANIZATIONS APPLAUD
GOVERNOR CUOMO REIGNING IN PAYROLL CARD ABUSE
The Western New York Worker Center (WNYCOSH), Western New York Area Labor Federation, AFL-CIO, and the Western New York Law Center commend the NYS Department of Labor and Governor Cuomo for advancing workers’ rights in New York, by adopting critical new payroll card regulations that protect workers’ hard-earned wages. New York’s wage laws have not kept up with the proliferation of the payroll card industry, and studies have shown that low-wage workers often end up paying high and hidden card fees to access their own wages, among other problems.
New York State’s new rules ban a laundry list of payroll card fees that unfairly deplete workers’ wages – including ATM and point-of-sale (“swipe”) fees, inactivity fees, monthly maintenance fees, overdraft fees, and customer service fees.
The rules also affirm workers’ right to choose how to be paid – whether by direct deposit, paper check or payroll card – and prohibit employers from forcing workers to receive wages on payroll cards. The new rules are the strongest of their kind in the country.
Our organizations, along with dozens of other community, labor, and civil rights groups and coalitions statewide, have 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 market the cards to employers as a strategy to reduce payroll expenses. Meanwhile, low wage workers who can least afford it bear the brunt of high fees and other abusive practices.
A 2014 survey conducted by New Economy Project, NYPIRG, and Retail Action Project found workers with payroll cards reported being hit with multiple fees, including fees for inactivity or to request a paper statement. Nearly one in four workers said they were charged overdraft fees, ranging from $5 – $30, despite the fact that payroll cards are typically marketed as a way to avoid costly bank overdraft charges. Fully half of workers said their employers did not offer them a choice of how to receive their wages — in violation of state and federal laws.
A 2015 survey by the WNY Worker Center and WNY Law Center in Buffalo confirmed these findings locally. Workers were often not given a choice of payment method and were charged fees to simply access their wages, often by both the ATM and the card company.
“What this means in Buffalo, which is among the nation’s poorest cities, is a larger portion of workers’ wages are being siphoned off. People start off with smaller incomes and every two-, three-, or five-dollar fee that is taken out is a larger percentage of that income,” said Richard Lipsitz, President of the Western New York Area Labor Federation, AFL-CIO.
“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.”
“We see people in our consumer clinics who despite working hard, often at two jobs, struggle to make ends meet. We strongly support the proposed rules, which eliminate many deceptive and abusive practices and ban payroll card issuers from charging workers high and hidden fees simply to access their own wages” said Joseph Kelemen, Executive Director of the Western New York Law Center.