© 2022 American Payroll Institute, Inc. APA Supports Employer-Integrated EIA in New Jersey In comments to New Jersey Sen. Majority Whip and bill sponsor Nicholas Scutari and Chair of the Senate Commerce Committee Nellie Pou, the APA supported with recommendations amendments to S. 3611 regarding earned income access (EIA) services. With revisions, the bill passed favorably out of committee on December 16, 2021. Clarity needed on definitions The bill would allow use of employer-integrated EIA services in the state but initially failed to recognize all models available to employers. For example, the definition of EIA service provider is “any person that is engaged in the business of delivering earned but unpaid income to a consumer in New Jersey.” This definition could apply to an employer that has implemented an in-house program for its employees. However, the bill also described “employer-integrated” as a contractual arrangement with a third party, which would not apply to internal programs. In the revised version of the bill, the definition changed to show the bill does not apply to internal employer programs. Language also was added to clarify that the definition of EIA services does not include payday advances or direct-to-consumer models. The definition of earned income access service provider requires contractual arrangements between an EIA service provider and a “service provider.” The APA said if a payroll service provider creates and implements a program for its employer-clients, bill language could be interpreted to mean a payroll service provider would need to contract with itself. Bill provisions are unclear whether payroll service providers would need a separate EIA service contract with their clients or whether they can offer the service bundled with other services. This problem was not corrected in the revised version of the bill. Program limits should be data driven Original bill language included a limit on EIA services to two times a week or unlimited if employees are given a no- fee option. The APA expressed preference for employers to make the determination on program limits. In addition, any consideration of limits should be data driven. The bill calls for the creation of an Office of Earned Income Access Services within the New Jersey Department of Banking and Insurance, which would be responsible for studying EIA services in the 24 months following bill passage. This study would identify whether services are helping or hindering employees with the management of their finances, including assessment of fees by providers and predatory practices. The revised bill eliminated the use limits. GRTF Garnishments Subcommittee Contacts Department of Education On December 15, 2021, the APA Government Relations Task Force (GRTF) Garnishments Subcommittee sent a letter to the U.S. Department of Education (ED) regarding the end of the temporary student loan forbearance period. The letter, drafted by a team of subcommittee members led by subcommittee chair Corri Flores, informed the ED about concerns on how the restarting of wage garnishments for student loans could impact payroll professionals and their employers. The Coronavirus Aid, Relief, and Economic Security (CARES) Act contained a provision that set federal student loan interest rates temporarily to 0%, as well as paused all payments on federal student loans. This forbearance period has been extended multiple times, with the final extension being issued on December 22, 2021, and ending on May 1, 2022. The Biden Administration has signaled there will be no further extensions. Potential payroll impacts In its letter to ED, the APA highlighted three key concerns regarding the restarting of student loan payments. The first was to request a flexible grace period to allow employers to receive and process orders. As millions of employees resume student loan payments, the massive workload could leave payroll professionals scrambling to comply with the orders in the requisite amount of time. Typically, employers that receive student loan orders must process the order on the pay period immediately after the request is received. The anticipated increase in volume, coupled with limited in-office personnel, could severely hamper payroll professionals’ ability to meet the tight deadline. The second request addressed the need for new garnishment orders at the end of the forbearance period. The APA is concerned that the ED and guaranty agencies will lift the suspension of garnishments and expect employers to resume withholding and remittance when employees may have moved, paid down their loans, left their employment, or otherwise have had a change in circumstances. Withholding orders from more than two years ago may no longer be viable. The final request APA made was that the payment address must be clearly communicated on all new orders. Previously, January 2022 A Supplement to Payroll Currently, Issue 1, Volume 30
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