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Minnesota Legislature

Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

                            CHAPTER 158-S.F.No. 2093 
                  An act relating to commerce; modifying definition of 
                  "wage"; regulating payroll cards and payroll accounts; 
                  requiring a study and report; amending Minnesota 
                  Statutes 2004, section 177.23, subdivision 4; 
                  proposing coding for new law in Minnesota Statutes, 
                  chapter 177. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 2004, section 177.23, 
        subdivision 4, is amended to read: 
           Subd. 4.  [WAGE.] "Wage" means compensation due to an 
        employee by reason of employment, payable in: 
           (1) legal tender of the United States,; 
           (2) check on banks convertible into cash on demand at full 
        face value or,; 
           (3) except for instances of written objection to the 
        employer by the employee, direct deposit to the employee's 
        choice of demand deposit account; or 
           (4) an electronic fund transfer to a payroll card account 
        that meets all of the requirements of section 177.255, subject 
        to allowances permitted by rules of the department under section 
        177.28. 
           Sec. 2.  [177.255] [PAYROLL CARD ACCOUNTS.] 
           Subdivision 1.  [DEFINITIONS.] For the purposes of this 
        section, the following terms have the meanings given them in 
        this subdivision.  
           (a) "Payroll card" means a card issued to an employee by an 
        employer or other payroll card issuer to access funds from the 
        employee's employee payroll card account. 
           (b) "Payroll card account" means an agreement providing 
        that an employer pays each participating employee's wages by 
        making an electronic fund transfer to an account, and 
        participating employees receive a payroll card to access their 
        funds. 
           (c) "Payroll card issuer" means an employer that issues a 
        payroll card to an employee or a bank or other entity that 
        issues a payroll card to an employee on behalf of the employer. 
           (d) "Offers a payroll card" includes both the direct offers 
        by the employer and the employer distribution to employees of 
        material describing a payroll card program prepared by a payroll 
        card issuer other than the employer. 
           (e) "Free" means no fee is deducted from an employee's 
        payroll card account or charged to the employee by the employer 
        or the payroll card issuer. 
           (f) "Fee" means any and all fees, charges, surcharges, or 
        costs. 
           Subd. 2.  [FILING.] A payroll card issuer must file with 
        the commissioner a notice containing: 
           (1) the entity's true name; 
           (2) any other names under which the entity conducts 
        business; 
           (3) the entity's address, which may not be a post office 
        box; and 
           (4) the entity's telephone number. 
           Subd. 3.  [OWNERSHIP OF WAGES.] Wages paid by electronic 
        funds transferred to an employee's payroll card account must be 
        owned by the employee. 
           Subd. 4.  [AVAILABILITY OF WAGES.] An employee who chooses 
        to be paid wages by electronic fund transfer to a payroll card 
        account must be permitted to withdraw by a free transaction from 
        the employee's payroll card account, an amount up to and 
        including the total amount of the employee's entire net pay, as 
        stated on the employee's earnings statement.  The free 
        transaction must be available to the employee on and after the 
        employee's regular payday. 
           Subd. 5.  [WRITTEN DISCLOSURE.] When offering an employee 
        the option of being paid wages by electronic fund transfer to a 
        payroll card account, the employer shall provide to the employee 
        written disclosure in plain language of all the employee's wage 
        payment options.  The written disclosure shall state the terms 
        and conditions of the payroll card account option, including, 
        but not limited to, the requirements set forth in this section 
        and a complete itemized list of all fees that may be deducted 
        from the employee's payroll card account by the employer or card 
        issuer.  The disclosure must also state that third parties may 
        assess transaction fees in addition to the fees assessed by the 
        employee's payroll card issuer or issuers.  For fees that may be 
        deducted or charged by the employer or payroll card issuer, the 
        dollar amount of each fee must be stated.  A copy of the written 
        disclosure must be provided to the employee. 
           Subd. 6.  [WRITTEN CONSENT.] The employer may initiate 
        payment of wages to an employee by electronic fund transfer to a 
        payroll card account only after the employee has voluntarily 
        consented in writing to that method of payment.  Consent to 
        payment of wages by electronic fund transfer to a payroll card 
        account shall not be a condition of hire or of continued 
        employment.  The written consent signed by the employee must 
        include the terms and conditions of the payroll card account 
        option as provided in subdivision 5.  A copy of the signed 
        written consent must be provided to the employee and be retained 
        by the employer.  
           Subd. 7.  [TRANSACTIONS; STATEMENTS; FEES.] The employer 
        shall provide to the employee, upon the employee's written or 
        oral request, one free transaction history each month that 
        includes all deposits, withdrawals, deductions, or charges by 
        any entity from or to the employee's payroll card account. 
           Subd. 8.  [NO LINK TO CREDIT.] The payroll card or payroll 
        card account shall not be linked to any form of credit 
        including, but not limited to, a loan against future pay or a 
        cash advance on future pay. 
           Subd. 9.  [PERSONAL INFORMATION.] Unless the employee 
        consents in writing to the use, information generated by the 
        employee's possession or use of a payroll card or payroll card 
        account may only be used to process transactions and administer 
        the payroll card and the payroll card account. 
           Subd. 10.  [LANGUAGES OTHER THAN ENGLISH.] An employer who 
        offers a payroll card account option to an employee using 
        materials in a language other than English, shall provide the 
        written disclosure and written consent required by subdivisions 
        5 and 6, and all payroll card account agreements in that other 
        language. 
           Subd. 11.  [CHANGE OF WAGE PAYMENT METHOD.] An employee who 
        is being paid wages by electronic fund transfer to a payroll 
        card account may request to be paid wages by another method that 
        is allowed by law.  Upon the employee's request to change the 
        wage payment method, the employer shall provide a form on which 
        the employee shall indicate the change.  The employer shall, 
        within 14 days of the employee's request, begin payment by a 
        different allowable method. 
           Subd. 12.  [LIMITATION ON EMPLOYER FEES.] An employer may 
        not charge an employee initiation, participation, loading, or 
        other fees to receive wages payable in an electronic fund 
        transfer to a payroll card account. 
           Subd. 13.  [PROHIBITED DEDUCTIONS AND CHARGES.] Fees 
        imposed by the employer or payroll card issuer that were not 
        disclosed to the employee shall not be deducted from the 
        employee's payroll card account or charged to the employee.  
        Inactivity or dormancy fees shall not be deducted from an 
        employee's payroll card account or charged to the employee.  
           Subd. 14.  [VIOLATIONS; PENALTY.] A violation of this 
        section is subject to the penalty provided in section 177.32, 
        subdivision 1.  
           Sec. 3.  [STUDY; REPORT.] 
           By February 15, 2007, the commissioner of labor and 
        industry must report to the chairs of the house and senate 
        committees with jurisdiction over jobs and economic development 
        on the use of payroll cards.  
           Sec. 4.  [EFFECTIVE DATE; TERMINATION.] 
           This act is effective the day following final enactment.  
        The amendments made by section 1, and sections 2 and 3 expire 
        May 31, 2007. 
           Presented to the governor May 31, 2005 
           Signed by the governor June 2, 2005, 5:10 p.m.