HB 1196, in its current form, would mandate burdensome requirements and instituteprice controls that could shut down employer payroll card programs currently offeredby banks in the State of Texas.
The legislation and bill analysis imply that all of the benefits and cost savings inherent in the
utilization of a payroll card program accrue to the employer. While it is true that there are
benefits and cost savings for the employer, there are also substantial benefits and costsavings for employees, especially those employees without a bank account who may beusing check cashing services and paying fees up to 15% of the face value of their check.In addition, employees benefit from the safety, security, and convenience features of apayroll card.
Banks do not promote payroll cards as the sole means for employers to transmit
compensation to employees. Instead, banks promote payroll cards as a voluntary,beneficial option for employers and for employees who may not have an existing bankaccount and who elect to receive wages via direct deposit.
While there are many free services available to the user of a payroll card, there are some fees
associated with certain repeat uses. However, the payroll card program, includingassociated benefits and fees, is fully disclosed, in writing, to each employee before theychoose to enroll in the program.
The definitions used in HB 1196 imply a misunderstanding of payroll card programs, how
they work, and the contractual relationships involved.
Several sections of HB 1196 (61.153, 155, 156, and160) are either in conflict with,
inconsistent with, or duplicate existing federal regulations that govern the operations and
disclosure requirements of payroll card programs. Banks already comply with FederalReserve Regulation E and Regulation P, which govern various aspects of bank productsand services, including payroll card programs.
If Section 61.158 prevails, banks may decide not to offer payroll card programs in theState of Texas. The provisions could require the bank offering the program to operateat a loss. The payroll card program is a voluntary program; therefore, the State should not
mandate how the program is offered and what fees are permissible.
In addition, the bank does not control what documents the employer provides to its
employees or in which languages such documents are provided. While we do make Spanish
language documents available as requested, we would not be able to comply with Section
61.158, as it would require the bank to provide the cardholder agreement in any language in
which the employer may provide other documents, such as the written consent form.