Senate Study Bill 1004 - Introduced SENATE/HOUSE FILE _____ BY (PROPOSED ATTORNEY GENERAL BILL) A BILL FOR An Act permitting the voluntary receipt by employees of payment 1 of wages by debit card or pay card and making penalties and 2 remedies applicable. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 1331DP (4) 86 je/rj

S.F. _____ H.F. _____ Section 1. Section 91A.3, subsection 3, Code 2015, is 1 amended to read as follows: 2 3. a. The wages paid under subsection 1 shall be paid using 3 a method authorized by this section. 4 b. Wages due may be paid at the employee’s normal place of 5 employment during normal employment hours or at a place and 6 hour mutually agreed upon by the employer and employee , or the 7 employee may elect to have the wages sent for direct deposit, 8 on or by the regular payday of the employee, into a financial 9 institution designated by the employee . 10 c. Upon written request by the employee, wages due may be 11 sent to the employee by mail. The employer shall maintain a 12 copy of the request for as long as it is effective and for at 13 least two years thereafter. 14 d. The employee may elect to have wages due sent for 15 direct deposit, on or by the regular payday of the employee, 16 into a financial institution designated by the employee. An 17 employee hired on or after July 1, 2005, may be required, as 18 a condition of employment, to participate in direct deposit 19 of the employee’s wages in a financial institution of the 20 employee’s choice unless any of the following conditions exist: 21 (1) The costs to the employee of establishing and 22 maintaining an account for purposes of the direct deposit would 23 effectively reduce the employee’s wages to a level below the 24 minimum wage provided under section 91D.1 . 25 (2) The employee would incur fees charged to the employee’s 26 account as a result of the direct deposit. 27 (3) The provisions of a collective bargaining agreement 28 mutually agreed upon by the employer and the employee 29 organization prohibit the employer from requiring an employee 30 to sign up for direct deposit as a condition of hire. 31 e. (1) An employer may offer payment of wages by debit 32 card or pay card pursuant to this section only if the employer 33 complies with all of the following requirements: 34 (a) The employer shall provide the employee with a clear and 35 -1- LSB 1331DP (4) 86 je/rj 1/ 6

S.F. _____ H.F. _____ conspicuous written disclosure when payment by debit card or 1 pay card is offered to the employee notifying the employee that 2 receipt of payment by debit card or pay card is voluntary on 3 the employee’s part and listing the other method or methods of 4 payment offered by the employer. 5 (b) The employer shall provide the employee written notice 6 when payment by debit card or pay card is offered to the 7 employee of all possible charges for use of the debit card or 8 pay card. The employer shall also provide the employee written 9 notice in advance of any change in the amount or frequency of 10 such charges. 11 (c) The employer shall provide the employee written notice 12 when payment by debit card or pay card is offered to the 13 employee of all possible fees that may be deducted from the 14 employee’s debit card or pay card account by the employer or 15 card issuer. 16 (d) The employer shall provide a written explanation to the 17 employee when payment by debit card or pay card is offered to 18 the employee as to how the employee may obtain, at no cost, the 19 employee’s net wages, check the account balance, and request to 20 receive paper or electronic transaction histories, as provided 21 in this paragraph “e” . 22 (e) The employer shall not use a debit card or pay card that 23 charges fees for any of the following: 24 (i) Point of sale transactions. 25 (ii) The application, initiation, or loading of wages by 26 the employer. 27 (iii) Declined transactions occurring two or fewer times in 28 a month, or fees beyond actual costs of processing the declined 29 transactions for all other declined transactions. 30 (iv) Account inactivity prior to three hundred sixty-five 31 days following activation of the debit card or pay card. 32 (v) For receiving wages by debit card or pay card. 33 (f) An employer shall not offer payment of wages by a debit 34 card or pay card pursuant to this section linked to any form of 35 -2- LSB 1331DP (4) 86 je/rj 2/ 6

S.F. _____ H.F. _____ credit including but not limited to overdraft fees or overdraft 1 service fees, a loan against future pay, or a cash advance on 2 future pay or work not yet performed. 3 (g) If an employee elects to have wages due paid by debit 4 card or pay card pursuant to this section, the employer shall 5 obtain the employee’s written consent to payment by debit card 6 or pay card. The employer shall obtain such consent without 7 coercion or the imposition of fear of discharge or reprisal. 8 (h) If an employee elects to have wages due paid by debit 9 card or pay card pursuant to this section, the employer shall 10 retain copies of the employee’s written consent, the notice of 11 charges, and the notice of fees for a period of not less than 12 two years from the date of the employee’s written consent and 13 from the dates the notice of charges and the notice of fees are 14 given to the employee. 15 (i) If an employee who has elected to have wages due paid by 16 debit card or pay card pursuant to this section requests that 17 the employer terminate payment by debit card or pay card, the 18 employer shall substitute another payment method in accordance 19 with this section no later than two pay periods after receiving 20 such request. 21 (2) An employer may offer payment of wages by debit card or 22 pay card pursuant to this section only if the debit card or pay 23 card provides the employee with all of the following: 24 (a) At least one method of withdrawing the employee’s full 25 net wages from the debit card or pay card at least once per pay 26 period, but not less than twice per month, at no cost to the 27 employee, at a location readily available to the employee. 28 (b) One transaction history at no cost to the employee, 29 which the employee may request to receive in paper or 30 electronic form, each month that includes all deposits, 31 withdrawals, deductions, or charges by any entity from or to 32 the employee’s debit card or pay card account. 33 (c) Unlimited telephone access to obtain the debit card or 34 pay card account balance at any time without a fee. 35 -3- LSB 1331DP (4) 86 je/rj 3/ 6

S.F. _____ H.F. _____ (d) Protections from unauthorized use in accordance with 1 federal and state law relating to electronic fund transfers. 2 b. f. If the employer fails to pay an employee’s wages on 3 or by the regular payday in accordance with this subsection , 4 the employer is liable for the amount of any overdraft charge 5 if the overdraft is created on the employee’s account because 6 of the employer’s failure to pay the wages on or by the regular 7 payday. The overdraft charges may be the basis for a claim 8 under section 91A.10 and for damages under section 91A.8 . 9 EXPLANATION 10 The inclusion of this explanation does not constitute agreement with 11 the explanation’s substance by the members of the general assembly. 12 This bill permits the voluntary receipt by employees 13 of payment of wages by debit card or pay card under Code 14 chapter 91A, the Iowa wage payment collection law, if certain 15 requirements are met. 16 An employer may offer payment of wages by debit card or pay 17 card under the bill only if the employer complies with certain 18 requirements. 19 The employer must provide the employee with a clear and 20 conspicuous written disclosure notifying the employee that 21 payment by debit card or pay card is voluntary and listing the 22 other method or methods of payment offered by the employer. 23 The employer must provide the employee written notice of 24 all possible charges for use of the debit card or pay card. 25 The employer must also provide the employee written notice 26 in advance of any change in the amount or frequency of such 27 charges. The employer must provide the employee written notice 28 of all possible fees that may be deducted from the employee’s 29 debit card or pay card account by the employer or card issuer. 30 The employer must provide a written explanation to the employee 31 as to how the employee may obtain, at no cost, the employee’s 32 net wages, check the account balance, and request to receive 33 paper or electronic transaction histories. An employer is 34 prohibited from using a debit card or pay card that charges 35 -4- LSB 1331DP (4) 86 je/rj 4/ 6

S.F. _____ H.F. _____ certain fees. An employer is prohibited from offering payment 1 of wages by a debit card or pay card linked to any form of 2 credit. 3 An employer must comply with certain requirements if an 4 employee elects to have wages due paid by debit card or pay 5 card pursuant to the bill. 6 The employer must obtain the employee’s written consent to 7 payment by debit card or pay card. The employer must obtain 8 such consent without coercion or the imposition of fear of 9 discharge or reprisal. The employer must retain copies of the 10 employee’s written consent, the notice of charges, and the 11 notice of fees for a period of not less than two years. The 12 employer must substitute another payment method in accordance 13 with Code section 91A.3 no later than two pay periods after 14 receiving a request for termination of payment by debit card 15 or pay card from an employee. 16 An employer may offer payment of wages by debit card or pay 17 card under the bill only if the debit card or pay card includes 18 certain provisions for the employee. 19 The employee must be provided at least one method of 20 withdrawing the employee’s full net wages from the card at 21 least once per pay period, but not less than twice per month, 22 at no cost to the employee, at a location readily available 23 to the employee. The employee must be provided upon request 24 one transaction history each month that includes all deposits, 25 withdrawals, deductions, or charges by any entity from or to 26 the employee’s debit card or pay card account at no cost to the 27 employee. The employee must be provided unlimited telephone 28 access to obtain the debit card or pay card account balance at 29 any time without a fee. The employee must be provided with 30 protections from unauthorized use in accordance with federal 31 and state law relating to electronic fund transfers. 32 Under Code chapter 91A, unpaid wages or expenses, along with 33 liquidated damages, court costs, and attorney fees, may be 34 recovered by the employee or the labor commissioner by civil 35 -5- LSB 1331DP (4) 86 je/rj 5/ 6

S.F. _____ H.F. _____ action. An employer who violates Code chapter 91A is also 1 subject to a civil penalty of not more than $500 per pay period 2 for each violation. 3 -6- LSB 1331DP (4) 86 je/rj 6/ 6