SB 581 — An Act amending the act of December 19, 1975 (P.L.604, No.173), entitled "An act to facilitate the use of electronic funds transfer systems by providing that credits to accounts in financial institutions designated by recipients shall satisfy legal requirements for payments by cash or checks," further providing for electronic funds transfers, for consumer protections and for payroll card accounts.

PRINTER'S NO.   588

                     THE GENERAL ASSEMBLY OF PENNSYLVANIA



                        SENATE BILL
                        No. 581
                                               Session of
                                                 2025

     INTRODUCED BY MILLER, BAKER, GEBHARD, FONTANA, STREET AND
        TARTAGLIONE, APRIL 9, 2025

     REFERRED TO LABOR AND INDUSTRY, APRIL 9, 2025


                                     AN ACT
 1   Amending the act of December 19, 1975 (P.L.604, No.173),
 2      entitled "An act to facilitate the use of electronic funds
 3      transfer systems by providing that credits to accounts in
 4      financial institutions designated by recipients shall satisfy
 5      legal requirements for payments by cash or checks," further
 6      providing for electronic funds transfers, for consumer
 7      protections and for payroll card accounts.
 8      The General Assembly of the Commonwealth of Pennsylvania
 9   hereby enacts as follows:
10      Section 1.    Sections 1.1 and 2 of the act of December 19,
11   1975 (P.L.604, No.173), entitled "An act to facilitate the use
12   of electronic funds transfer systems by providing that credits
13   to accounts in financial institutions designated by recipients
14   shall satisfy legal requirements for payments by cash or
15   checks," are amended to read:
16   Section 1.1.    Electronic funds transfers.
17      (a)   Authorization.--For the purposes of any statute, rule or
18   regulation requiring any payment to be made in lawful money or
19   by check, whether for wages, salaries, commissions or other
20   claims of any kind, the payment may be made by credit to an
 1   account in a financial institution, including a payroll card
 2   account, authorized to accept deposits or payments if the
 3   recipient has authorized the method of payment in writing or
 4   electronically.
 5      (b)   Duties of employers.--
 6            (1)   An employer may pay wages, salaries or commissions
 7      due to an employee by credit to an account in a financial
 8      institution, including a payroll card account, in accordance
 9      with this subsection.
10            (2)   If the employer elects to eliminate both options for
11      an employee to receive payment in lawful money or by check
12      and offers payment only by credit to an account in a
13      financial institution, the employer shall notify the employee
14      in clear and conspicuous language that the employee will no
15      longer have the option to receive payment in lawful money or
16      by check.
17            (3)   The employee shall receive the notice at least 45
18      days prior to the date of the payday that the employee will
19      no longer have the option to receive payment in lawful money
20      or by check. The notice shall:
21                  (i)    clearly state that it is the employee's right to
22            designate the account in a financial institution to
23            receive payment;
24                  (ii)    explain the employee's options, including
25            direct deposit and a payroll card account;
26                  (iii)    include the date of the payday that the
27            employee will no longer have the option to receive
28            payment in lawful money or by check;
29                  (iv)    clearly state that, if the employee does not
30            designate a financial institution at least seven days

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 1            prior to the payday specified under subparagraph (iii),
 2            the employer may make payment to the employee to a
 3            payroll card account established at a financial
 4            institution designated by the employer; and
 5                  (v)   include any form and instructions necessary for
 6            the employee to designate the account in a financial
 7            institution of the employee's choosing to receive
 8            payment.
 9      (c)   Failure to designate financial institution.--
10            (1)   If an employee does not designate a financial
11      institution at least seven days prior to the payday specified
12      under subsection (b)(3)(iv), the employer may pay wages,
13      salaries or commissions due to the employee to a payroll card
14      account established at a financial institution designated by
15      the employer that complies with the requirements of section
16      2.1 or temporarily by negotiable check, in the discretion of
17      the employer.
18            (2)   Before initially enrolling an employee in a payroll
19      card account in accordance with section 2.1(1), the employer
20      shall offer the employee the opportunity to designate the
21      account in a financial institution to receive payment in
22      accordance with subsection (b).
23   Section 2.     Consumer protections.
24      When wages, salaries, commissions or other payments are
25   transferred to an account at a financial institution as
26   described in section 1.1:
27            (1)   the financial institution holding the account to
28      which transfers are made shall provide the employee or other
29      payee with the disclosures, notices of transfer, change in
30      term notices, access to account information and other

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 1      consumer protections to the extent required by 12 CFR [Part]
 2      Pt. 1005 (relating to electronic fund transfers (Regulation
 3      E)) and 83 Fed. Reg. 30, 6364 (February 13, 2018) (relating
 4      to rules concerning prepaid accounts under the Electronic
 5      Fund Transfer Act (Regulation E)); and
 6          (2)     an employer shall provide an employee with a written
 7      or electronic statement of earnings and deductions each pay
 8      period in accordance with applicable law.
 9      Section 2.      Section 2.1(4) and (9) of the act are amended and
10   the section is amended by adding a paragraph to read:
11   Section 2.1.    Payroll card accounts.
12      In addition to any other requirements under this act, all of
13   the following provisions apply when payment of wages, salaries,
14   commissions or other compensation is made through transfers to a
15   payroll card account:
16          * * *
17          (4)     Prior to [obtaining an employee's authorization,
18      the] enrolling an employee in a payroll card account, the
19      employer shall provide the employee with clear and
20      conspicuous notice relating to payroll cards issued under
21      paragraph (1), in writing or electronically, of all of the
22      following:
23                (i)    All of the employee's wage payment options. The
24          disclosure under this subparagraph shall include a
25          statement substantially similar to any of the following:
26                      (A)   "You do not have to accept this payroll
27                card. Ask your employer about other ways to receive
28                your wages."
29                      (B)   "You have several options to receive your
30                wages: (list of options available to the employee,

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 1               including direct deposit into a checking account of
 2               the employee's choosing) or this payroll card. Tell
 3               your employer which option you choose."
 4               (ii)    The terms and conditions of the payroll card
 5        account option, including the fees that may be deducted
 6        from the employee's payroll card account by the card
 7        issuer.
 8               (iii)    A notice that third parties may assess fees in
 9        addition to the fees assessed by the card issuer.
10               (iv)    The methods available to the employee for
11        accessing wages without fees.
12        * * *
13        (9)    The employer shall honor an employee's written or
14    electronic request to change the employee's method of
15    receiving wages from a payroll card account to direct deposit
16    [or negotiable check]. The change shall take effect as soon
17    as practicable, but no later than the first payday after 14
18    days from receipt by the employer of the employee's request
19    and any information necessary to implement the change.
20        * * *
21        (11)    In addition to the restrictions on payroll card
22    accounts specified under this section, if an employer removes
23    the option for an employee to receive payment by both lawful
24    money and check and makes payment to employees by a payroll
25    card account established at a financial institution
26    designated by the employer in accordance with section 1.1(b)
27    and (c):
28               (i)    the employer may not use a payroll card account
29        that charges a fee for the overdraft of the payroll card
30        account; and

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 1              (ii)   in lieu of the limits on fees specified under
 2          paragraph (5)(ii), the payroll card account shall provide
 3          the employee with the ability, without charge by the card
 4          issuer, to make two in-network ATM withdrawals each pay
 5          period, or if the employee is paid more frequently than
 6          weekly, one in-network ATM withdrawal weekly.
 7      Section 3.   The addition of section 2.1(11) of the act shall
 8   not apply to payroll card accounts provided to employees before
 9   the effective date of this section.
10      Section 4.   Nothing in this act shall affect, modify or amend
11   a collective bargaining agreement in effect on the effective
12   date of this section.
13      Section 5.   This act shall take effect in 60 days.




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