With everyone trying to cut costs and improve their carbon footprint, paperless pay whether in direct deposit or in a Payroll card has become a cost effective way for wage payment.  A payroll card is a prepaid, reloadable card issued by a national or regional bank on behalf of an employer.

Although most employers would like to compensate employees using direct deposit alone, many states prohibit mandatory direct deposit into an employee’s personal bank account.  Moreover, a surprisingly large number of employees do not have savings or checking accounts.  Because “unbanked” workers tend to come from protected minority groups, wage payment programs requiring direct deposit may run afoul of federal and state anti-discrimination statutes.

Offering a payroll card along with direct deposit can resolve this issue because everyone can participate.  Paperless pay is lawful as long as an employee is provided at least one means of accessing their full wages each pay period without cost.

For those clients of Total Team Solutions, we offer employees who are “unbanked” a very cost effective Bank of America Payroll Card.

Paperless Pay will continue to grow and employers can implement electronic wage payment without fear of costly litigation or administrative enforcement action as long as they comply with applicable state laws.  And the number of States that permit paperless wage payment will surely increase in coming years.