ATLANTA -- For Georgia workers who do not have a bank account, payday means cash or a check to take to a check casher or to the issuing bank.
A midstate lawmaker convinced the state Senate to add prepaid debit cards as a payroll option, but not without controversy.
“This just clarifies the law and gives employers an option if they so choose” to load pay onto a card, said state Sen. Burt Jones, R-Jackson, ahead of the Senate vote Thursday.
Credit card companies including Visa and MasterCard already run payroll card services. The employer loads the card with the employee’s pay, and the card is accepted everywhere credit cards are accepted and at ATMs. Under Jones’ bill, employers choose the card and hand out paperwork documenting all the fees and rules. Employees can then choose to opt out. “They have to provide the employee the parameters of the card, ... and they have to give them an opt-out one pager,” he said.
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Fees at check-cashing stores can be “astronomical,” Jones said. Debit cards, he said, could be a cheaper option for people who do not have a bank account.
About 5.4 percent of employed people nationwide had no bank account, according to a 2013 Federal Deposit Insurance Corp. survey. The figure was 7.5 percent for Georgia.
A handful of opponents to Jones’ bill tried to give the default choice to the employee, not the employer.
“There is more awareness when you are opting into something” rather than out, said Senate Minority Leader Steve Henson, D-Tucker.
He is worried about what he called “gouging” by payroll card companies.
Some cards tack on fees for ATM withdrawals, transfers to a bank account, replacement cards, additional cards, customer service calls, online bill pay and inactivity. The practice has already caused controversy in other states.
After an investigation, the New York state attorney general last year recommended allowing employees the choice of payment method and requiring fee-free ATM withdrawal options. A Pennsylvania federal court is hearing a case that alleges fees on one payroll debit card amount to illegal deduction of wages.
Jones insisted on employers’ choice.
“Georgia is a right-to-work state. We take a lot of pride in that, and if you are a Georgia company employing Georgia citizens here, then you should simply have the say on how you would like to structure your company. ... You should have the right to chose whether you want to do direct deposit, cash or whether you want to do check or even in the form of a debit or credit card.”
The Senate agreed, by a vote of 43-8. Senate Bill 88 now moves to the House.