Prepaid Debit Cards Here to Stay

From the Desk Of:

Scott M. Tilley, Esq.

President, Managing Attorney

Certified Specialist Workers' Compensation Law

The State Bar of California Board of Legal Specialization

Prepaid Debit Cards for Indemnity Payments Are Here to Stay. Update

Your Consent Language Now.

The pilot program that let California employers pay indemnity benefits by prepaid debit card was set to expire January 1, 2027. It won't now. That changes how you should be documenting consent and payment-method changes on every claim using cards today.

Governor Newsom signed AB 1683 on July 6, 2026. The bill strikes the sunset language that would have shut the prepaid card option down at the start of next year, making it a permanent part of how indemnity benefits can be paid in California.

The consumer protections are permanent too, not just the option

AB 1683 doesn't just extend the program; it locks in the protections that came with it. Workers must be able to withdraw their full balance without a fee. They need reasonable ATM access and the ability to make point-of-sale purchases without the card issuer charging them for it. None of that was ever optional, but with the sunset gone, none of it is temporary either. Build your card programs assuming these rules are permanent, because they now are.

Consent still has to be real, and still has to be written

The law is explicit that a prepaid card cannot be imposed on a worker. Employees must give written consent before an employer can default them into card payments. And the choice isn't locked in either direction: workers and employers can switch between a prepaid card and check or direct deposit with 30 days' written notice. If your claims files don't have documented, written consent for every claimant currently on a prepaid card, that's now a permanent gap instead of a temporary one you could let ride until the pilot expired anyway.

Why this matters more than it looks like it should

This is an administrative statute, not a headline-grabbing reform, but it touches every indemnity payment made by card in the state. A permanent program means permanent audit exposure if your consent documentation isn't clean. It also means you can stop hedging bets on whether to keep investing in card infrastructure, since the sunset that made that investment risky is gone.

What to do about it now

Audit your current prepaid card claimants for written consent on file. If any claimant was defaulted onto a card without documented consent, fix that now rather than waiting for it to surface in a dispute or an audit. Confirm your card vendor's fee structure complies with the no-fee withdrawal and ATM access requirements, since those were always the law and now have no expiration date. And update your claims intake procedures to treat the 30-day notice and switch right as a standing feature of every card-paid claim, not a temporary accommodation.

Law Offices of Parker & Irwin

This post is for general information only and is not legal advice.