Up until the early1950s, workers in coal mines and logging were paid in scrip, a form of payment that could only be used in the company owned stores. You weren’t paid by cash or check and your company scrip was only valid at your company’s shops. This led to employees being gouged on prices, having no freedom to spend the money they earned anywhere else. This, eventually, became illegal and most Americans thought that it could never happen again.
With the rise of technology, however, many low-paying jobs have begun paying their employees with payroll debit cards. While not as bad as scrips, the fees added on to the cards keep low-wage earners in a state that is similar to indentured servitude. Natalie Gunshannon, worked for McDonald’s, and is suing the franchise over forcing her to be paid in such a manner.
Ms. Gunshannon, 27, Dallas Twp., and an untold number of current and former employees had no option to receive a traditional paycheck or get paid by direct deposit, she and her attorneys said in the class-action against franchise owners Albert and Carol Mueller of Clarks Summit.
Ms. Gunshannon, who worked at the Shavertown McDonald’s for a month after being hired April 24, refused to activate the payroll card after reviewing the fee structure, quit the job and reached out to an attorney to see if the practice was legal.
The J.P. Morgan Chase payroll card carries fees for nearly every type of transaction, according to the lawsuit, including a $1.50 charge for ATM withdrawals, $5 for over-the-counter cash withdrawals, $1 to check the balance, 75 cents per online bill payment and $10 per month if the card is left inactive for more than three months.
With the exception of ATM withdrawls, there are no banks that charge such fees on a regular checking account and many banks have begun eliminating ATM withdrawal fees.
State law…requires wages be paid in “lawful money” or with a check.
At question in the lawsuit is whether or not payroll debit cards are considered lawful money. While some retail stores and restaurants give the option of direct deposit or debit cards, many are starting to offer only debit cards. A post on reddit had many people relating their stories of franchise establishments that force employees to be paid in this manner. Reportedly, Applebees, GameStop, Charter Cable, Wal-Mart, Burger King, Sonic, and Xerox are using the cards too.
It isn’t just the one franchisee, though. They’re pushing it across the nation. My SO works at a McDonald’s in the midwest, and they pay the same way. No other options. And I’ve had friends working at Walmart get paid the same way.
When I started with my last security job it was either a card like that or direct deposit. You could make one withdrawal per pay cycle for free. After that it was $2.50 per withdrawal. Any kind of payment with it cost a fee of one dollar. Supposedly we could go to issuing bank’s bench to have withdrawals done for free at the counter, but none of the branches I went to knew how to do it. It was stuck at $19.97 until I called the bank and threatened legal action because I couldn’t access my money without a fee. They offered to take the card, close the account, and issue my funds in cash. Until I threatened lawyers they told me there was nothing they could do. Also, surprise, the one free withdrawal didn’t come into play anymore once my bank handled direct deposits.
Centerplate , who boast being the largest hospitality company in the world, uses these awful cards. I remember they make you sign away your rights to a check when you are hired.
Books-A-Million forces this on anyone without a bank account for direct deposit. There is no option for a paper check.
Wanna know something even worse? Arizona pays all benefits such as unemployment on to an EBT card. You are forced to have this pseudo account with JP Morgan Chase
My undergrad alma mater started to do this with financial aid money as I was finishing. Any refunded money went on a card given by a 3rd party bank. There was a fee to have your refund transferred to your own bank, each time you withdrew any money (in addition to the ATM fee from the bank that owns the ATM) or used it to make purchases at a store. If you did not complete surveys and other stuff designed to generate ad revenue on the account website, your account went inactive and you could not access the money. My senior year of school I found that the most inexpensive way to get all my scholarship money was to withdraw $300 a day in cash for a week and then take it to my own bank. The fee was cheaper than transferring it to my bank.
All temp agencies in my surrounding area have already did this. It’s cheaper on them than printing out checks and you can check your hours online. The biggest problem with this is all of their payroll fucking sucks. Because they don’t verify hours anymore, you are off a lot and they pay you next payroll via direct deposit or one of these shitty cards. They tell you when you are hired, get a bank account or get one of these shitty cards that will chew up 20% of your check just using the fucking thing.
If I had known you could sue for this, I would have sued Gamestop YEARS ago for their bullshit “Maestrocard”. Shit was from Europe and only worked on 1 ATM in my town. 5$ to withdraw, 3$ for cash back, 1$ to check balance, and it DIDN’T work as a card. So essentially every pay day, I would have to write myself a check (of which I only had 7.) and then cash it for my FULL check and carry cash. This shit oughta be illegal.
Working for a Denny’s franchise in Texas, the only payroll option available is a Money Network prepaid card. After losing the card I discovered that the only way to avoid all the similar fees was to do a one-time free transfer to my bank account over the phone every payday.
While not the same as a scrip or forced payroll debit card, there is also the practice of requiring employees to purchase equipment at company stores.
I worked at Koch Membrane. The company claimed in the job description that they would provide a $75 reimbursement on safety toe shoes. What they didn’t openly tell us was that you had to buy the shoes from a specific shoe company to get the reimbursement.
Great Dane Trailers had this same policy when I worked there. Overpriced Red Wing boots from their company office were required. Of course, they gave us a “discount”. Same deal for welding masks, drill bits, earplugs, and pretty much everything else. All from the shop, all required.
Payroll cards should not be recognized as legal tender for employees. Employees should also not be forced to purchase clothing and equipment only from a single shop unless it is at cost or cost +10%. Many of the franchises that are using payroll debit cards and enforce these practices do not pay the employees enough money to allow for them to save their money as any savings they might possibly have is taken away in fees. As one employer commented in the NBC forums:
Both Chase and Citi and some other places keep sending me marketing material trying to get me to use these payroll debit cards for my employees. It states that the payroll money paid to my employees sits in my interest bearing account, and the employees each have a non-interest bearing sub account that they spend from. I don’t get a kickback on the transaction fees, but I do get $50 per card when a new card is assigned to an employee. They also pay a very generous interest rate to me. The kicker is employees can add money to their accounts, and I earn interest on it.
It sounds like a great deal for me, and a bad deal for my employees. I prefer to sleep at night and let them put there money where they want it.
This is why employers are switching to payroll debit card. They save money by not cutting checks and they make money in interest, while their employees continue to languish at the bottom of society.