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Can we offer pay cards to our California employees?

Possibly but with strict limitations. Wages must be payable in cash without fees at a California location, so any pay card that charges transaction fees would violate the law.

Under Labor Code Section 212, wages must be paid by cash, check, or direct deposit (with the employee’s voluntary consent). Pay and debit cards involve direct deposit, so their use must be voluntary. Employers cannot require employees to use pay cards.

Pay cards have not been clearly addressed by California courts. If offered, employers must still provide itemized wage statements as required by Labor Code Section 226.

In a 2008 opinion letter, the DLSE stated that the use of payroll debit cards and money network checks doesn’t violate the Labor Code so long as all the following conditions are met:

The receipt of payment in this manner is voluntary;
Employees have other payroll payment options;
There is no fee to use this form of payment at least once per pay period at a banking institution in California;
The employee has immediate access to the funds; and
The employee has specifically authorized the form of payment.

Employers should consult with legal counsel to ensure their pay card program complies with the law.

Read about Form of Wage Payment in the HR Library.

Q&As

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