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.