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House Co-Sponsorship Memoranda

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House of Representatives
Session of 2017 - 2018 Regular Session


Posted: June 28, 2017 11:35 AM
From: Representative Stephen Bloom
To: All House members
Subject: Payroll System Flexibility for Employers
I am preparing to introduce legislation that would allow Pennsylvania employers to move into the 21st
century by allowing them to switch to all-electronic payroll systems.

My legislation would amend Act 173 of 1975 to remove the requirement that an electronic deposit of payment be specifically requested by the recipient. Instead, recipients would be required receive notification of the electronic method of payment and be given an opportunity to specify an account at a financial institution to which payment will be made.

As you may remember, Act 161 of 2016 was recently enacted to provide guidelines on the use of payroll debit cards- a popular option for employees who do not have traditional bank accounts. My bill would dovetail with the new law to give employers the flexibility to move to fully electronic payroll systems and avoid the expense and risk of issuing paper checks to employees.

Federal law and regulations governing electronic funds transfers do not prohibit employers from requiring direct deposit. My bill is intended to bring Pennsylvania law in line with the federal requirements, which are more flexible for employers than current state law. Indeed, the federal Consumer Financial Protection Bureau has issued interpretative guidance on this matter

"An employer (including a financial institution) may not require its employees to receive their salary by direct deposit to any particular institution. An employer may require direct deposit of salary by
electronic means if employees are allowed to choose the institution that will receive the direct deposit."

I believe that in an increasingly cash less and paperless society, our state law should not burden employers with mandates to provide outdated methods of pay. I hope that you will join me in cosponsoring this bill.

View Attachment

Introduced as HB1855