Tag Archives: Payroll Debit Cards

Paycheck pitfalls – what’s in their wallet?

Oops!

A couple of years ago, a group of employees working for a McDonald’s franchise filed a class action lawsuit in Pennsylvania alleging their employer required them to accept wages in the form of payroll debit cards—with fees for use of the cards assessed by the debit card provider.

The workers claimed that requiring them use to payroll debit cards violates the Pennsylvania Wage Payment and Collection Law (WPCL). If you want to dig a little deeper into the case, you can read more about it here. The lawsuit hasn’t been settled yet but it should serve as a “heads up” to all employers.

Payday options

PaycheckAs payroll cards become more popular, employers planning to use pay debit cards should shy away from making them a requirement and consider the following:

  • Providing employees with an option for payment of their wages, such as being paid by check, direct deposit, or a payroll debit card.
  • Getting each employee’s written authorization for payment via direct deposit or payroll debit card.
  • Using a debit card provider that does not charge fees.

Another option could be to use a card provider that allows employees at least one fee-free withdrawal per pay cycle. I’m not a fan of this option for a couple of reasons. One is that, if you have employees at or near the minimum wage, the fee(s) could cut their overall pay to a level that is below legal requirement. Another is that you run the risk of creating an employee morale issue if employees view using fee-based cards as having to pay to get paid.

Besides, the Feds don’t allow employers to require use of payroll debit cards and neither do many states. If you want to learn more about the federal and state requirements on what is appropriate for paying employees, view the 50-State Comparison Chart on direct deposit at Compensation.BLR.com.

Now, back to my day job.