02/07/2025 01:30 PM Senate LABOR & COMMERCE

         SB  79-PAYMENT OF WAGES; PAYROLL CARD ACCOUNT                                                                      
                                                                                                                                
1:58:38 PM                                                                                                                    
CHAIR  BJORKMAN   reconvened  the   meeting  and   announced  the                                                               
consideration  of SENATE  BILL NO.  79 "An  Act relating  to wage                                                               
payments."                                                                                                                      
                                                                                                                                
1:58:55 PM                                                                                                                    
SAVAYA  BIEBER,  Staff,  Senator  Jesse  Bjorkman,  Alaska  State                                                               
Legislature, Juneau,  Alaska, introduced SB  79 on behalf  of the                                                               
sponsor as follows:                                                                                                             
                                                                                                                                
[Original punctuation provided.]                                                                                                
                                                                                                                                
     SB 79 allows  employers to credit wages  to an employee                                                                    
     on  a   payroll  card  account   if  an   employee  has                                                                    
     authorized  use of  a  payroll card,  or  if they  have                                                                    
     failed  to   authorize  deposit  of  the   wages  to  a                                                                    
     specified account.                                                                                                         
                                                                                                                                
     This legislation gives employers  another option to pay                                                                    
     their  employees  that  could be  less  expensive  than                                                                    
     other forms  of payment and avoids  the difficulties of                                                                    
     distributing   paper  checks.   SB  79   also  provides                                                                    
     employees without  a bank account a  solution to accept                                                                    
     payment  of their  wages that  avoids  a check  cashing                                                                    
     fee.                                                                                                                       
                                                                                                                                
1:59:52 PM                                                                                                                    
SENATOR GRAY-JACKSON asked if this is the original bill from the                                                                
House or an amended bill.                                                                                                       
                                                                                                                                
2:00:06 PM                                                                                                                    
MS. BIEBER answered it's the original bill.                                                                                     
                                                                                                                                
2:00:24 PM                                                                                                                    
MS. BIEBER presented the sectional analysis for SB 79 as                                                                        
follows:                                                                                                                        
                                                                                                                                
[Original punctuation provided.]                                                                                                
                                                                                                                                
          SB 79 Payment of Wages; Payroll Card Account                                                                        
                                                                                                                              
                  Version A Sectional Analysis                                                                                
                                                                                                                                
     Section 1:  Amends AS 23.10.040(a) to  add AS 23.10.044                                                                  
     allowing an employer to pay via payroll card account.                                                                      
                                                                                                                                
     Section 2:  AS 23.10  is amended  by adding  section AS                                                                  
     23.10.044                                                                                                                  
         (a)Allows an employer to pay wages to a payroll                                                                        
            card  account  if an  employee  has  voluntarily                                                                    
            authorized or if an  employee has not authorized                                                                    
           deposit of their wages to a bank account.                                                                            
         (b)States an employer paying wages to a payroll                                                                        
            card account  shall notify  the employee  of the                                                                    
            terms and conditions of payroll cards.                                                                              
         (c)A payroll card account must provide an employee                                                                     
            with at least one  cost-free withdrawal each pay                                                                    
            period, up to  the amount of the  employee's net                                                                    
            wages, and  a cost-free  mechanism to  check the                                                                    
            account balance  through a  phone system  and an                                                                    
            additional    unlimited    cost-free    electric                                                                    
            mechanism to check account balances.                                                                                
         (d)An employer may not offer a payroll card account                                                                    
            that charges  fees for  employee  application or                                                                    
            participation in the account,  or issuance of an                                                                    
            employee's   card  and   one  replacement   each                                                                    
            calendar year, or transfer  of employee wages to                                                                    
            the   account,   or   point-of   sale   purchase                                                                    
            transactions.                                                                                                       
         (e)An employer may not offer a payroll card account                                                                    
            unless the  wages are  insured on  a passthrough                                                                    
            basis by an entity that insures bank deposits.                                                                      
         (f)This section protects employees' right to                                                                           
            bargain collectively through  representatives of                                                                    
            their   choice  to   establish  mechanisms   for                                                                    
            payments of wages.                                                                                                  
         (g)Defines "payroll card" and "payroll card                                                                            
           account" in statute.                                                                                                 
                                                                                                                                
2:02:33 PM                                                                                                                    
AMY MILLER, Senior Director, Government Affairs, Automatic Data                                                                 
Processing (ADP LLC), Washington D.C., testified by invitation                                                                  
on SB 79.                                                                                                                       
                                                                                                                                
[Original punctuation provided.]                                                                                                
                                                                                                                                
     Good afternoon  Chairman and members  of the  Labor and                                                                    
     Commerce  Committee.  Thank  you  for  offering  me  an                                                                    
     opportunity to  speak briefly in  support of SB  79. My                                                                    
     name  is Amy  Miller  and  I am  a  Senior Director  of                                                                    
     Government  Relations  at  ADP.  ADP  is  the  nation's                                                                    
     largest provider of  human capital management solutions                                                                    
     supporting,  among  other   things,  HR,  payroll,  and                                                                    
     benefits  administration and  we pay  1 in  every 6  US                                                                    
     employees.  ADP is  uniquely  positioned to  understand                                                                    
     the  importance of  supporting  and transitioning  from                                                                    
     paper to electronic forms of pay.                                                                                          
                                                                                                                                
     SB  79, which  ADP strongly  supports, would  eliminate                                                                    
     the  requirement  that  Alaska  employers  offer  paper                                                                    
     paychecks as  a form of  wage payment. Under  the bill,                                                                    
     employers  would  have  the right  to  offer  employees                                                                    
     payment options by direct deposit  or payroll cards. We                                                                    
     think  this  will  benefit  employers  from  a  payroll                                                                    
     management   and   expense   perspective   while   also                                                                    
     providing  significant  benefits  to employees.  To  be                                                                    
     clear,  nothing in  the  bill  prevents employees  from                                                                    
     continuing  to  receive  pay   by  direct  deposit  and                                                                    
     employers could  offer paper checks if  they so choose.                                                                    
     Further,  the bill  protects  the  right to  collective                                                                    
     bargaining   arrangements    and   does    not   impact                                                                    
     regulations for payment of wages to state employees.                                                                       
                                                                                                                                
     There are much better  alternatives to paper paychecks.                                                                    
     Advances in technology have  improved how employees can                                                                    
     be paid more timely, consistently and securely.                                                                            
                                                                                                                                
     Electronic  pay   protects  employers.   Under  certain                                                                    
     circumstances,  it can  be  effectively impossible  for                                                                    
     employers to  comply with  wage payment  laws governing                                                                    
     the timely  payment of wages  if they must  offer paper                                                                    
     checks. Too  often, employees who receive  paper checks                                                                    
     can't  get   paid  on  payday   if  there   are  events                                                                    
     preventing the timely  issuance of paper pay    such as                                                                    
     the   all-too-common   weather    events   in   Alaska.                                                                    
     Electronic payments eliminate this concern.                                                                                
                                                                                                                                
     This  bill  would  make payment  of  wages  better  for                                                                    
     employees.  Paper checks  can  interfere with  workers'                                                                    
     financial security decisions because  they do not allow                                                                    
     for easy  and timely  access to wages.  Employees often                                                                    
     take extra steps to travel  to the workplace to receive                                                                    
     paper checks,  travel to a  bank to deposit  the checks                                                                    
     and  wait for  the  checks  to clear     even with  new                                                                    
     capabilities  for depositing  checks  via mobile  phone                                                                    
     app, there  is still  several business days'  delay for                                                                    
     checks to  clear. If  mail is  slow, employees  may not                                                                    
     receive  their  pay  on schedule.  Some  employees  use                                                                    
     costly  check-cashing  stores   and  then  carry  their                                                                    
     entire paycheck  in cash, which  is subject to  loss or                                                                    
     theft. Further, even employees who  don't qualify for a                                                                    
     bank  account can  receive a  payroll  card from  their                                                                    
     employer.                                                                                                                  
                                                                                                                                
2:05:31 PM                                                                                                                    
MS MILLER continued with her testimony.                                                                                         
                                                                                                                                
     Payroll  cards  also  offer employees  better  consumer                                                                    
     protections and convenience.  Employees can use payroll                                                                    
     cards anywhere  they would use  a check  including free                                                                    
     online bill payments and  online shopping. In addition,                                                                    
     payroll cards can be used  for travel arrangements that                                                                    
     require electronic  payments (such as  flights, hotels,                                                                    
     rental cars,  etc.). But  unlike paper  checks, payroll                                                                    
     cards  provide protections  from fraud  or unauthorized                                                                    
     use and  also provide free associated  savings features                                                                    
     and financial  wellness tools. Finally,  workers cannot                                                                    
     overdraw their  payroll card accounts, so  there are no                                                                    
     insufficient fund or NSF fees                                                                                              
                                                                                                                                
     Passing  SB 79  will enable  Alaska to  align with  the                                                                    
     fact  that   most  payments  are   already  electronic.                                                                    
     Virtually all  government payments are  electronic (for                                                                    
     example: tax refunds,  social security payments, etc.).                                                                    
     According  to  the  National Automated  Clearing  House                                                                    
     Association 93%  of American  workers are  already paid                                                                    
     via direct deposit.                                                                                                        
                                                                                                                                
     In addition,  most states already allow  for electronic                                                                    
     pay as the only option  for employees. This has been an                                                                    
     effective means of pay in  the more than 30 states that                                                                    
     permit  electronic  wage  payments (direct  deposit  or                                                                    
     payroll  card). From  our experience  employees quickly                                                                    
     adapt and are often thankful for the change.                                                                               
                                                                                                                                
2:07:26 PM                                                                                                                    
SENATOR BJORKMAN held SB 79 in committee.