What do you want in your wallet?

In the age of technology, some businesses are opting away from issuing paychecks to employees. Instead, some are choosing to pay employees using payroll debit cards. This practice recently attracted scrutiny, however, after a former worker at a large fast-food chain filed a class-action lawsuit alleging employees were not offered the chance to be paid by check. 

In response to the garnered attention, the Consumer Financial Protection Bureau issued a bulletin warning employers against using only payroll debit cards to pay workers. The Bureau said that employers cannot mandate that employees receive wages on a payroll debit card chosen by the employer and that workers must be able to choose their own form of payment for wages. As a result, employers must offer alternatives, such as direct deposit into a bank account or a paper check. Furthermore, if employees choose to be paid with payroll debit cards, they are entitled to protections such as disclosure of fees associated with the cards. 

The Bureau found that payroll debit cards can carry fees that are not clearly disclosed. For example, fees may include a $1.50 minimum charge for an ATM withdrawal, $5.00 for an over-the-counter cash withdrawal, $1.00 to check the card's balance, up to $1.00 for each online bill payment, and $15.00 to replace a lost or stolen card. These mandatory fees can cut into the employee's earnings such that it may drop those earnings below the applicable minimum wage. 

While the majority of states do not have actual laws governing payroll debit cards, the departments of labor for most states have weighed in with guidance for paying employees in this manner. If you currently utilize payroll debit cards, or are considering using them, please contact your Elarbee Thompson attorney to review state laws in concert with the Bureau's recent warning bulletin.