We previously discussed on this blog the potential risks associated with the use of payroll debit cards to pay wages to employees. The absence of federal and state regulations specifically addressing this relatively new payroll option makes the use of payroll debit cards a target for potential wage and hour claims and litigation.
These risks were emphasized recently when Judge Thomas F. Burke, Jr. of the Luzerne County Court of Common Pleas certified a class of 2,380 former or current employees of a McDonald’s franchisee in Luzerne County in the class action case captioned as Siciliano et al. v. Albert/Carol Mueller T-A McDonalds et al. In Siciliano, the plaintiffs allege that their employer illegally paid workers using fee-laden debit cards in violation of Pennsylvania law. The plaintiffs seek more than $1.2 million in damages.
In addition to the state law claims at issue in Siciliano, there are federal law requirements that may apply to payroll debit cards. In October 2013, the federal Consumer Financial Protection Bureau (CFPB) issued Bulletin 2013-10 on the subject of payroll card accounts. In its Bulletin, the CFPB confirmed its position that federal law prohibits employers from mandating that employees receive wages only on a payroll card of the employer’s choosing.
The recommendations we made in 2013 for employers in Pennsylvania who wish to pay wages via payroll debit cards remain the same today.
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Provide the employee with the option of either being paid by direct deposit or a payroll debit card, because it currently is unclear whether an employer lawfully may require that an employee accept payment of wages only via a payroll debit card.
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Obtain signed authorization from the employee for payment via payroll debit card.
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Use a bank that levies minimal or no fees, and that allows the employee at least one fee-free withdrawal per pay cycle.
