Resolution in Support of Payroll Cards Exposed

The Resolution in Support of Payroll Cards was considered by ALEC's Commerce, Insurance and Economic Development Task Force at the 2011 States and Nation Policy Summit on December 1, 2011. This bill was part of the ALEC task force agenda between 2010 and 2012, but due to incomplete information, it is not known if the bill passed in a vote by legislators and lobbyists at ALEC task force meetings, if ALEC sought to distance itself from the bill as the public increased scrutiny of its pay-to-play activities, or if key operative language from the bill has been introduced by an ALEC legislator in a state legislature in the ensuing period or became binding law.

ALEC Draft Bill Text

Summary

Payroll cards provide a safe, convenient, and cost-effective method of wage payment for both employees and employers—bringing underserved citizens into the financial mainstream. Existing laws on payroll cards provide important consumer protections. This resolution opposes recent efforts to over-regulate payroll card laws, such as unreasonable mandates on employers to provide programs that require free banking services which will ultimately increase the cost of payroll card provision, reduce the likelihood of their use, and consequently, their benefits.

Model Resolution

WHEREAS, a payroll card is a reloadable prepaid card issued to an employee by or on behalf of an employer through a national or regional bank, credit union, or savings and loan association for the receipt of wages and other compensation; and

WHEREAS, a payroll card provides access to many fee-free financial services that would not otherwise be available to unbanked and under-banked employees; and

WHEREAS, payroll cards are one of the least expensive means for employees to receive their wages and provide underserved employees with a pathway into the financial mainstream; and

WHEREAS, private sector employers should be able to use this beneficial payment method that the Federal Government and a majority of States already understand the value of and use to deliver benefits payments as well as payroll; and

WHEREAS, payroll cards provide significant cost savings to employers by allowing them to transition to electronic payments and avoid the significantly higher costs associated with issuing paper checks; and

WHEREAS, payroll cards provide employers with a reliable means of providing employees payment even when unforeseen obstacles arise, such as natural disasters, employee illness and inclement weather; and

WHEREAS, payroll cards are already regulated in many states and consumers are afforded necessary protections and disclosures through existing laws; and

WHEREAS, the American Legislative Exchange Council (ALEC) has approved model policy enabling the use of payroll cards by employers with reasonable consumer protections; and

WHEREAS, efforts that impose restrictions beyond those set forth in the approved ALEC model policy and efforts that require unreasonable mandates on employers to provide programs that offer free financial services to unbanked employees would serve only to increase the costs and administrative burdens of providing payroll cards for both employers and payroll card providers, making them less likely to offer payroll cards.

THEREFORE BE IT RESOLVED, that ALEC opposes the enactment of laws that go beyond requiring full and free access to wages and that require employers and issuers to provide unreasonable free financial services to employees.