Payroll Cards and Fees are Workers’ Rip-off and in Some Cases Illegal

Citizen Wealth Financial Justice


New Orleans  Some employers, including McDonalds, Walgreens, and others are forcing workers to be paid through bankcards.   They “load” the cards with the amount owed the workers, and according to recent reports are even making money via kickbacks or rebates from the card issuer, oftenbig banks like Citi and others.   These same banks make out like bandits because the cards generate significant fees for anything as small as a balance inquiry or as large as a couple of bucks for using an ATM that is “out of network.”  A story in the New York Times recently reported a number of cases of workers feeling coerced to agree to these supposedly “voluntary” systems, and in some cases they were clearly not voluntary at all.   The New York Attorney General Eric Schneiderman has now announced an investigation with inquiries to 20 large employers from Walmart on down.

            This has been a rip-off ever sense banks invented these cards, but what is categorically clear is that if companies like some of the McDonalds franchisees are mandatorily requiring minimum wage workers to have to access their funds in this way, then it is also likely illegal.  The Fair Labor Standards Act (FLSA), which was passed 75 years ago, sets the federal minimum wage.  Workers cannot receive less than these wages.   If the employer requires a uniform, then it is settled law that the employer has to pay for the uniform and the cost of laundering the uniform.   If the employer requires the worker to pay certain out-of-pocket transportation costs, then those costs would have to be reimbursed.  Why?  The FLSA requires that nothing can dilute the worker’s wage so that she is making less than the federally required minimum which is currently $7.25.   So in reported cases where McDonalds might be paying $7.44 an hour, if these add-on’s reduce the amount the worker receives to less than $7.25 then back pay and penalties are owed.   Of course if the worker is only being paid $7.25, then it is already clear that this is against the law.

            This is open and shut, and if it’s happening in New York, these bank cards are undoubtedly being marketed, bought, and used to exploit workers all over the country.  Some state laws, like the ones in New York, may offer some additional protections, but at the least, anything anywhere that leaves a worker with less than the minimum under FLSA is plainly and simply against the law and workers are owed money.  Banks are so used to playing fast and loose with any and all laws that they probably don’t much care, but employers are on the hook now, and we all ought to make sure that they do right by their workers.   They are already paying way too little, so they have no right to pick the pockets of their own employees, no matter what their feeble excuses might be.