August 2013

By: Anthony J. Caruso, Esq.

Today, Illinois employers like all employers are looking for ways to control their costs associated with paying their employees. Thus, in the electronic age, the payment of wages by a “live” check has become somewhat obsolete. Instead, employers are now using the options of direct deposit and/or debit/credit cards for payment of wages.

In Illinois, the payment of wages is governed by the Illinois Wage Payment Act. Under that law, employers can use a direct deposit program to pay their employees as long as it is purely voluntary. If an employee does not have a bank account or chooses not to use direct deposit, the employee is legally entitled to a “live” check under the law.

Recently, Illinois employers have been using another electronic option to pay wages, the payroll debit/credit card. Unfortunately, alleged abuses of the option by employers have been recently reported in the news.

In order to clarify the situation, the Illinois Department of Labor (IDOL) has now issued a Public Advisory (to all employers and employees in Illinois) as to what is acceptable under the Illinois Wage Payment Act with regard to electronic payroll debit/credit cards. The IDOL requirements are as follows:

• EMPLOYEE MUST VOLUNTARILY AGREE TO THE PAYROLL CARD. Employer can NOT mandate the use in any manner.
• ALL FEES, PENALTIES, AND COSTS WITH THE USE OF THE PAYROLL CARD MUST BE DISCLOSED IN WRITING TO THE EMPLOYEE. Employee is entitled to the full monetary value of their wages without any discount.
• EMPLOYER REQUIRED TO GIVE EMPLOYEE ITEMIZED STATEMENT ON WAGES AND DEDUCTIONS FOR EACH PAY PERIOD.
• EMPLOYEE CAN REVOKE AT ANY TIME AND OPT FOR DIRECT DEPOSIT OR LIVE CHECK.

By issuing this Advisory, the Illinois Department of Labor is also encouraging Illinois employees to file a complaint with them if an employer is improperly using the payroll card for payment of wages. As an Illinois employer, make sure if you are using payroll cards that the program complies with the law to avoid potential liability.

If you have any questions or concerns about this topic or any other questions related to employment, please call attorney Anthony J. Caruso of Wessels Sherman’s St. Charles, Illinois office at (630) 377-1554 or e-mail ancaruso@wesselssherman.com.