State House approves legislation aimed at protecting low-wage workers
Online Staff Report
SPRINGFIELD, Ill. — Illinois Attorney General Lisa Madigan (D) praised Illinois House lawmakers for passing legislation that puts in place protections for low-wage workers who receive their wages on a payroll card, an increasingly common method of payment used by Illinois employers. The bill would provide important protections for workers against unreasonable fees to access their pay.
House lawmakers voted 63-39-1 April 11 to send House Bill 5622 to the Senate.
The bill, crafted by Madigan’s office and sponsored by state Rep. Arthur Turner, D-Chicago, addresses this increasingly popular form of payment used by employers of hourly, low-wage workers at fast food restaurants and stores.
Instead of issuing paper checks, employers are offering payroll cards loaded with wages every pay period that are similar to pre-paid gift cards and can be used to make purchases and ATM withdrawals. But unlike a pre-paid gift card, employees are charged numerous fees to access or spend their earned wages, including: a $5 account inactivity fee, a $3 fee for requesting a monthly statement of their account, or 50-cent fees every time they want to use their card, make a purchase or check their account balance.
Last year, Madigan’s office began investigating the use of payroll cards after receiving complaints from employees in Illinois and discovered the unreasonable fees attached to the cards and other practices that reduce the employees’ earnings. The office crafted the legislation to put a stop to the harmful practices.
“My goal is to ensure low-wage workers receive all of their wages,” Madigan said. “It makes no sense that the amount you receive on a gift card is better protected than the wages you receive on a payroll card. This bill is designed to ensure that workers actually get all of their wages, instead of losing them to unreasonable fees.”
The bill would help ensure payroll cards benefit employees by prohibiting fees for simply accessing funds or checking an account balance, while also providing employers with flexibility to meet the proposed requirements. The bill would provide important guidance for employers wishing to use this new form of wage payment.
“Ideally, every worker would be able to have a bank account and build their savings each pay period,” Turner said. “Unfortunately, this is not the case for employees throughout the state of Illinois. Allowing businesses to pay their employees through electronic debit cards gives workers a secure, convenient and no-cost alternative to a paycheck.”
House Bill 5622 would:
• Ensure employees can access their wages without incurring fees;
• Ensure employees can access their account balances and their transaction histories without fees;
• Place sensible protections on payroll cards to safeguard employees;
• Preserve employees’ right to choose the payment method that works for them, whether that method is check, direct deposit or payroll card;
• Require employers to give employees notice of the terms of the payroll card program; and
• Prohibit fees for overdrafts, declined transactions and purchases.
State Sen. Kwame Raoul, D-Chicago, will sponsor the bill in the Senate.
Posted April 11, 2014