House Passes Bill Protecting Workers from Payroll Card Fees

Last week, the Illinois House passed legislation (HB5622) that would protect workers from the hidden and abusive fees of many payroll cards. The bill was sponsored by Representative Turner and supported by the Illinois Attorney General.

Payroll cards are growing in popularity in Illinois. Some Illinois employers are no longer paying their employees with a check or via a direct deposit into a bank account. Rather they are loading wages onto a payroll card. Payroll cards are particularly being used for workers that are unbanked.

Large employers like Sears, U-Haul, UPS, and McDonalds are using this method to pay many of their workers. At first glance this may seem like a great idea and offer a convenience for people who don’t already have a traditional bank account. The problems arise as soon as the worker swipes the card, and in some cases even before that.

payroll cardPayroll cards are not regulated at the federal or state levels. Currently, businesses are not required to fully disclose the terms of the payroll card program or ensure that workers can access their hard earned wages without incurring fees.

At a recent Stepping Out of Poverty forum, hosted by Community Organizing & Family Issues (COFI), workers shared their stories on how these fees have repeatedly drained their budgets. Often times workers would use their cards only to find surprisingly low balances because of abusive and hidden fees that ate away at their balance.

HB5622 would provide consumer protections from many of these fees, including:

  • Monthly Fees
  • Point of transaction fees
  • Fees to check your balance
  • Customer service fees
  • Overdraft fees

The bill also requires employers to give employees notice of the terms of the card and obtain their voluntary consent before enrolling them in a payroll card program. It also guarantees that employees can access their full wages at least once every two weeks without incurring a fee.

HB5622 now moves to the Senate where it is being sponsored by Senator Raoul. If you or someone you know has a story about payroll cards we need your voice! Find your State Senator and urge them to support HB5622. To share your payroll card story and be part of the movement contact IABG.

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Senate Passes the Illinois Secure Choice Savings Program

On a vote of 31-22-2, the Illinois Secure Choice Program (SB2758) passed out of the Illinois Senate today. The bill will give millions of private sector workers the opportunity to save their own money for retirement by expanding access to employment-based retirement savings account.

More than 2.5 million workers do not have access to a retirement savings account through their employer, according to a report from Woodstock Institute. The report found lack of access is most serious for low-wage workers, of whom 60 percent lack access, but even for workers making $40,000 or more, 49 percent do not have access to an employment-based retirement savings plan. In every Senate district in Illinois, over half of private-sector workers do not have access to this type of plan.

SB2758, sponsored by Senator Daniel Biss, will automatically enroll workers without access to an employer-based retirement plan into the Secure Choice program. While workers can opt-out of the program, those that do participate will be able to build savings in an Individual Retirement Account (IRA) through a payroll deduction.

“We’re facing a looming retirement security crisis: 2.5 million Illinois workers lack access to employer-sponsored retirement plans. Unless we act now to help give Illinois residents the tools to save, the number of retirees living in poverty will continue to grow,” said Senator Biss. “The Secure Choice program will have a minimal impact on the state and participating businesses, but the effect for workers will be the difference between a retirement in dignity and a retirement in poverty.”

The bill will now move to the House where Representative Barbara Flynn Currie will be the Chief Sponsor. She is the current sponsor of the companion bill, HB4595.

“The Secure Choice Savings Program makes it easy for Illinois workers to save without burdening employers or the state,” Representative Currie said. “This is a bill that every legislator who cares about the retirement security of Illinois workers should vote for.”

The Illinois Asset Building Group (IABG) is advocating, along with its partners, for the passage of the Illinois Secure Choice Program. “Secure Choice provides workers an easy way to save their own money for retirement,” said Lucy Mullany, Coordinator of IABG and a Senior Policy Associate with Heartland Alliance. “We thank the Senate for taking a big step towards stronger retirement security for Illinois workers and look forward to working with Members of the House to pass this legislation out of the General Assembly.”

The Illinois Secure Choice Savings Program is supported by IABG, Heartland Alliance, Woodstock Institute, the Sargent Shriver National Center on Poverty Law, SEIU Healthcare, AARP Illinois, and over 45 organizations and businesses across the state.

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