On Payroll Deductions And Virtual Currencies
Around 3:00 yesterday, I did a double take when I read a summary of proposed regulations by New York’s Department of Labor provided by Bond, Schoeneck and King that would prohibit employers from deducting political contributions from the wages of employees who wish to make voluntary contributions to political action committees (PACs). To put it mildly, this proposal would inconvenience the efforts of the Association (which offers payroll deduction for employees who wish to make contributions to the federal PAC) and others throughout New York State to raise money to support their political activities.
The proposal is meant to flesh out amendments made last year to section 193 of New York’s Labor Law, which regulates payroll deductions but, in my ever so humble opinion, it seems to go well beyond what is required by including a section listing activities that the Department of Labor contends are specifically banned under the law. It is in this section that the DOL would ban deductions for “contributions to political action committees, campaigns, and similar payments.” Since federal regulations promulgated by the Federal Election Commission permit corporations to utilize payroll deduction as a legitimate fundraising tool, there is already a question as to whether or not these federal regulations preempt the state proposal as applied to federal campaign activities. I’m not an election law attorney, and I won’t even pretend to be one, so at this point I will just keep you posted on developments with this proposal.
Incidentally, your H.R. person should take a look at the regulations as well as the new statute. There are many provisions that help clarify nettlesome payroll deduction issues, one which I know that credit unions have to deal with indirectly involves clarification of an employer’s right to deduct overpayments to an employee from future wages. By the way, these regulations were about as difficult to find as a politician defending the IRS. The Department of Labor should consider revamping its website so that us non-labor lawyers might actually find it informative.
First Shot Fired In Regulation Of Virtual Currencies
This has no direct impact on credit unions yet, but yesterday the Department of Homeland Security took legal action seeking to freeze the business activities of a U.S. subsidiary of a Japanese Corporation that acts as a broker of the electronic currency known as the Bitcoin. Several weeks ago, FinCEN issued a guidance opining that while the user of a virtual currency does not have to be registered as a “money services business” (MSB) and are not subject to BSA regulations, an administrator or exchange which trades such currency does have to be registered with FinCEN. Why is this important?
Because while no one would question the ability of the federal government to regulate currency, the increasing use of electronic currency with which individuals buy and trade products and services without ever utilizing cash or coin raises fundamental questions as to what power the U.S. has to regulate such activities.