The August 2014 issue of Hawaii Business Magazine contains an article discussing a new law that was passed from the 2014 legislative session which modernizes Hawaii’s payment of wages law by clarifying that employers may pay their employees’ wages by direct deposit or paycards under certain circumstances. The author of the article, Alex Bitter, and I had a lengthy conversation about the new law, and he ended up quoting me a couple of times for the article.
Under Hawaii’s old law, employers were only permitted to pay wages via “cash” or “check.” (Technically, the DLIR previously authorized the payment of wages via direct deposit and paycards, but that authorization came from the department’s administrative authority and did not actually amend Hawaii’s law. Rather, it simply provided the department’s interpretation of Hawaii’s payment of wages law.)
This new law, Act 208, expressly authorizes employers to pay employees via direct deposit or paycards, if certain conditions are met. For direct deposit, the employer must comply with six different requirements, including obtaining voluntary authorization in writing, using a financial institution that is insured by the FDIC or comparable agency, allowing the employee to cancel the direct deposit at any time, providing a pay statement to the employee, and not requiring the employee to pay any costs or fees for the direct deposit.
For paycards, employers must comply with 12 different requirements, including providing a notice to employees of paycard conditions, accepting responsibility for fees assessed against the employee that are outside the paycard fee schedule, and allowing employees the ability to make at least three free withdrawals on the card (at least one of which permits withdrawal of the full amount of the employee’s net wages).
You can read a copy of the new law here: Act 208. You can also read a copy of the Hawaii Business Magazine article here: New Rules Make Paycards More Costly for Companies.