October 10, 2016
Reporter's Notebook

CT gets on board with e-pay cards

PHOTO | CNN
PHOTO | CNN

Connecticut employers whose workers lack access to traditional deposit-banking and check-cashing services now have a paperless, electronic option to offer.

Effective among a passel of state laws starting Oct. 1, Connecticut joined a long list of other states with its provision allowing employers to pay workers via a prepaid money card akin to an automated teller machine (ATM), debit or credit card.

Doing so makes it, observers say, more convenient for thousands of Connecticut residents who regularly relied on costly check-cashing services to convert their paper paychecks to cash.

"It seems to be the evolution in the way banking and transactions are handled,'' said attorney James Leva, an employment litigator at law firm Day Pitney LLC.

Visa was among various labor, electronic-payment organizations and other groups that submitted supporting testimony for the Connecticut measure. Visa cited data from NACHA, an electronic payments organization, that employers can save about $3 per salary payment using electronic-payment methods. Visa also cited a federal bank regulator's data that almost 4 million paychecks are lost or stolen annually, costing them $8 to $10 per check.

"Employers have told us that it is less expensive for them to issue the cards than to issue checks,'' state Labor Department's Wage and Workplace Standards Division Director Resa Spaziani said via email.

For workers, the prepaid salary cards offer convenience and savings, but safety, too, experts say. They can use their salary to electronically pay their rent or other bills — just as bank debit-cardholders do — shop for food and clothing, or make cash withdrawals at ATMs.

The state Labor Department stresses that the prepaid salary card option is strictly voluntary for employers and their workers. The measure also limits the amount of fees imposed on employees who enroll.

– Gregory Seay

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