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Debit Cards as Paychecks

A former McDonald's worker in Pennsylvania is suing the franchise owner, but not the whole corporation, saying she was required to receive her wages through a debit card that charged fees.

Natalie Gunshannon, says she and other workers were paid through a JPMorgan Chase Payroll Card, which has a $1.50 fee for ATM withdrawals, a $10 inactivity fee after ninety (90) days, a 75 cent online payment fee per transaction, a $5 for over-the-counter cash withdrawals, $1 per balance inquiry and $15 for a lost or stolen card. Ms. Gunshannon asked if she could be paid by check and was allegedly told the debit card was the only option.

Pennsylvania law states that employees are entitled to have a choice to be paid by check or cash. Ms. Gunshannon filed a lawsuit and is hoping to have her case certified as a class action on behalf of other employees who were also paid with the card. Ms. Gunshannon was paid $7.44 per hour and worked 30 to 37 hours as a part time worker.

A former McDonald's worker in Pennsylvania is suing the franchise owner, but not the whole corporation, saying she was required to receive her wages through a debit card that charged fees. Natalie Gunshannon, says she and other workers were paid through a JPMorgan Chase Payroll Card, which has a $1.50 fee for ATM withdrawals, a $10 inactivity fee after ninety (90) days, a 75 cent online payment fee per transaction, a $5 for over-the-counter cash withdrawals, $1 per balance inquiry and $15 for a lost or stolen card. Ms. Gunshannon asked if she could be paid by check and was allegedly told the debit card was the only option. Pennsylvania law states that employees are entitled to have a choice to be paid by check or cash.

Ms. Gunshannon filed a lawsuit and is hoping to have her case certified as a class action on behalf of other employees who were also paid with the card. Ms. Gunshannon was paid $7.44 per hour and worked 30 to 37 hours as a part time worker. Ms. Gunshannon also states that the fees caused her to make less than the required minimum wage which in Pennsylvania is $7.25 per hour. Ms. Gunshannon did not accept the card and chose not to enroll in the payroll system because she felt the fees would be exorbitant.

Ms. Gunshannon's attorney, Mike Cefalo states that the debit card method and its fees are, "squeezing the most vulnerable of society." The franchise owner responds that there were several ways that workers could access their money for free and that paying by debit card is a valid form of compensation.

The Department of Labor is currently investigating the issue to see if any federal statutes have been violated. Ms. Lenore Uddyback-Forston, a spokeswoman from the Department of Labor states that, "as long as the fees do not cause wages to drop below $7.25 per hour, the federal minimum wage, the practice does not violate the Fair Labor Standards Act."

The prepaid debit card has been rapidly adopted for payment of government benefits, including Social Security, unemployment benefits, and tax refunds. According to the American Payroll Association (hereinafter "APA"), prepaid debit cards eliminate check cashing fees, physical delivery problems and reduce the risk of loss.

The APA goes on to say that employers adopted this new technology to bring the benefits to employees, including many who do not have conventional bank accounts. Suzanne Martindale, staff attorney with Consumers Union, said some employers are motivated to pay wages with these payroll cards to cut the cost of distributing paper checks.

Through a wage payment statute, effective August 5, 2008, Colorado specifically permits payment by debit card so long as the employee may access his or her wages without cost, or if payment by debit card involves a cost, the employee can choose another means of wage payment that involves no additional cost. See, C.R.S. 8-4-102. If you have a question about your compensation, contact a lawyer to discuss your legal rights.

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