The New York Senate approved payroll industry legislation on January 28th. The National Payroll Reporting Consortium greatly appreciates the willingness of the Senate Democratic Majority and relevant bill sponsors to engage our industry following the recent incidents involving MyPayrollHR and Cachet. NPRC supports S.6525-A (Carlucci), S. 6726 (Ramos) and S.6728 (Breslin). Unfortunately, the industry is disappointed that none of the bills passed today directly address the critical role automated clearinghouse (ACH) providers play in the payroll marketplace.
The National Payroll Reporting Consortium and its sister associations are actively working with the NYS Department of Financial Services to create a comprehensive regulatory structure for our industry that will support New York businesses while preventing situations like what transpired with MyPayrollHR and Cachet. In order to have an effective regulatory framework, it is critical that ACH processors, such as Cachet, be included as part of the regulation. Unfortunately, the Senate bills fail to include them. This omission is extremely problematic as ACH processors often play a central role within the industry providing the electronic distribution of payroll earnings directly to employees.
In the incident in question, it was the ACH processing firm Cachet that initiated the payroll direct deposit reversals, wrongfully withdrawing funds from thousands of employee bank accounts without authorization. Yet ACH processing firms like Cachet are not affected by the Senate bills, and would not be liable for damages as envisioned in these legislative bills.