In recent years, an increasing number of employers have begun using Payroll Debit Cards to pay employees who are unable or unwilling to sign up for direct deposit.  Payroll Debit Cards or “Paycards” are similar to reloadable credit cards and gift cards.  Instead of receiving paychecks, the employee receives the card which resembles a standard credit/debit card.  Employees are then able to use the card as a standard debit card to withdraw cash, transfer funds and to make purchases.

Benefits of the payroll debit card include:

• Reduced costs for employers
• No credit check required for employees as this is a prepaid card
• Reduced costs for employees
• Ability for the employee to withdraw funds from most ATMs.
• Employees are able to make purchases, view balances and transfer funds online

Virginia Law Allows the Use of Payroll Debit Cards

Virginia Law allows employers to pay employees through Payroll Debit Card.  To pay current employees through payroll debit card, employers must:

• Provide full written disclosure to employees of any fees related to the payroll debit card
• Obtain written consent from the employee

At the present time, Virginia law does not allow employers to mandate that current employees receive payment either through direct deposit or payroll debit card.  In order to pay wages through payroll debit card, the employer must obtain consent from the employee.  As a result, current employees can refuse to participate and still must be paid by cash or check.

Employees hired after January 1, 2010, however, can be required to elect either payment through payroll debit card or direct deposit.  If these employees fail to sign up for direct deposit, the employer can make payments through payroll debit card without employee consent as long as the employer provides the employee with the ability to make one free withdrawal or transfer of the funds per pay period.