As we previously reported, on September 7, 2016, the New York State Department of Labor (“NYSDOL”) published final regulations on the methods by which employees must be paid, including with respect to direct deposit of wages and payroll debit cards.  These regulations–to be codified in 12 NYCRR Part 192–were scheduled to take effect on March 7, 2017.

On February 16, 2017, the New York State Industrial Board of Appeals (the “IBA”)–an independent agency charged with reviewing the validity and reasonableness of NYSDOL rules, regulations, and orders–revoked the regulations, determining that they were “invalid because they exceed [the NYSDOL’s] rulemaking authority.”

The IBA focused on two provisions in the regulations–(1) the requirement that employers provide access to one or more ATMs that offer withdrawals at no cost to employees, and (2) the prohibition on charging employees certain fees related to the use of a payroll debit card.  The IBA held that rulemaking in these areas was the purview of the State’s Department of Financial Services, which regulates banks and financial institutions, and not the NYSDOL.

Employers should bear in mind that Section 192 of the Labor Law continues to govern the direct deposit of wages in New York.  That section prohibits an employer, without the advance written consent of an employee, from directly depositing the employee’s wages in a bank or other financial institution.  (Section 192 does not apply to employees in a bona fide executive, administrative, or professional capacity earning more than 900 per week.)

In addition, the IBA interprets Section 193 of the Labor Law to prohibit an employer from imposing any charge or fee on an employee as a condition of the employee receiving his or her wages.

The NYSDOL has 60 days to appeal the IBA’s decision to the New York State Supreme Court.  Pending the outcome of any such appeal, the future of the 12 NYCRR Part 192 regulations remains uncertain.