House Bill 5622, sponsored by Representative Art Turner, and championed by Attorney General Lisa Madigan, institutes clear consumer protections in the Illinois Wage Payment and Collection Act for users of payroll cards.

Businesses across the country, specifically industries that employ low-wage workers, are turning to payroll cards as a cost-saving method for paying employees. Distributing earnings via payroll cards can be a cheaper for employers than distributing paper checks. For workers who do not have bank accounts where money can be directly deposited, a payroll card can be safer than carrying cash. Unfortunately, payroll cards are often littered with fees to access the funds, check the card balance and transaction history, and make debit transactions. For low-wage workers, these fees can eat away at much-needed income. In a recent Chicago Tribune article, Attorney General Madigan pointed out that currently, Illinois law provides better protection for gift cards than for payroll cards.

While Illinois law and federal law require that employers give employees  the option of a paper check or direct deposit to receive their wages, Illinois law is silent on the use of payroll cards. Given this grey area, HB5622 will codify specific consumer protections for Illinois workers whose employers choose to use payroll cards. Specifically, the bill:

  • Requires employers to provide an itemized list of all fees associated with the payroll card;
  • Prohibits employers from automatically enrolling employees in payroll cards;  employees must opt in;
  • Enables employees to access their full wages without any fee at least once every two weeks;
  • Provides that employees have access to a free paper copy of their transaction history once a month as well as free access to their account balance;
  • Bans fees on declined transactions and point of sale transactions; and,
  • Prohibits linking the card to any form of credit, including overdraft fees or services.

Despite opposition by the Illinois Chamber of Commerce and the Illinois Bankers Association, HB5622 passed out of the House by a vote of 63-29-1 and moves to the Illinois Senate where Senator Kwame Raoul will be the chief sponsor.

Woodstock Institute is grateful for the Attorney General’s leadership on this issue and will continue to work with her staff and with legislative champions to protect Illinois workers. Workers should be able to access their wages for free, without unfair fees and charges eating away at their hard-earned money—and this bill goes a long way toward ensuring that fair paycheck access becomes the law in Illinois.