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“The DLSE concluded that payment of wages by debit cards and money checks comply with Labor Code §212 and 213. The arrangement is voluntary and the employees can make at least one withdrawal without fees.”

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legal updates

August 2008

PAYROLL UPDATE



DLSE OK’s Payment

Of Wages By Debit Cards

And Money Checks


By Christopher W. Olmsted

California’s labor enforcement agency, the DLSE, has approved the use of debit cards and money checks for payment of wages. The two methods work as follows:

Debit cards: Payroll is deposited into debit card accounts on scheduled paydays. Employees can use the cards to gain immediate access to their full wages. They can make at least one withdrawal without a transaction fee. Participation is voluntary.

Money checks: Employees are given a book of blank checks. On each payday, the employees call a toll free number and are given an authorization code to write on the check. Employees can then cash the payroll check at designated locations in California. Again, participation is voluntary.

California law does not explicitly permit or prohibit payment of wages by debit card or money checks. Labor Code §212 regulates the form of payment of wages. It requires that a paycheck be negotiable and payable in cash at a place of business in California. Labor Code §213 permits payment of wages by direct deposit in a California bank account.

The DLSE concluded that payment of wages by debit cards and money checks comply with Labor Code §212 and 213. The arrangement is voluntary and the employees can make at least one withdrawal without fees. The DLSE also determined that the banks providing the card or check need not have a branch office in California. It is sufficient, for the debit card, the employee can obtain cash at a Visa-member ATM or financial institution in California. For the money checks, it is sufficient that the checks can be cashed at designated business locations.

Before utilizing either method of payment, employers should review the technical requirements described in the opinion letters and seek legal counsel. The letters can be found on the DLSE’s website at the following addresses:

Debit cards: http://www.dir.ca.gov/­dlse/­opinions/­2008-07-07.pdf
Money checks: http://www.dir.ca.gov/­dlse/­opinions/­2008-07-07-2.pdf




More Legal Update articles.
Download entire August Legal Update in PDF format.


This article is intended as a brief overview of the law and are not intended to substitute as legal advice. Any questions or concerns regarding any statute or case law should be addressed to a licensed attorney. Copyright © 2008 by Barker Olmsted & Barnier, APLC. San Diego, California. All rights reserved.





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