B2B Payments

Restaurant Behemoth’s Payroll Cards Cause Uproar


Payroll cards are a divisive tool. On one hand, they can provide employees with a way to get paid, even if they don’t have a bank account; on the other, critics say they’re plagued by unfair fees.

One corporation’s decision to expand its payroll card program has fueled this debate. Darden Restaurants Inc., the parent company of Olive Garden, came under fire by Restaurant Opportunities Centers United, which issued a report that found Darden saved more than $5 million a year by shifting employees to payroll cards.

The report highlighted employees’ accusations that these payroll cards lead to smaller paychecks because of bank fees.

A separate report highlighted alleged missteps in Darden’s payroll card program.

According to the Social Initiatives Foundation, The Moriah Fund and the Discount Foundation, nearly one-quarter of Darden employees said they were never educated on how to use their cards. Further, 42 percent said they had trouble accessing their funds, and 75 percent said they have had to pay fees to access funds via ATM machines.

Withdrawal limits were also frequently cited as a concern from payroll card-using employees, reports said.

More than half (63 percent) said they were never informed about these fees, while nearly half said they didn’t have access to ATMs that didn’t charge fees for using their payroll cards.

More than one-quarter — 26 percent — said Darden told its employees they have no alternative but to use a payroll card.

Darden isn’t letting the issue go unnoticed, however. The company announced late last week that it is adding 29,000 ATMs that will not charge fees when employees withdraw wages from their payroll cards, leading to a total of 79,000 ATMs. The change will come into effect on June 1, reports said.

Further, June 1 will also see the end of a policy that charges $0.50 when a payroll card is rejected at a point of sale due to insufficient funds.

The changes were announced by a Darden spokesperson, who added that the conclusions drawn from the report attacking its payroll card practices were questionable, considering analysts surveyed just 200 employees.


New PYMNTS Study: Subscription Commerce Conversion Index – July 2020 

Staying home 24/7 has consumers turning to subscription services for both entertainment and their day-to-day needs. While that’s a great opportunity for providers, it also presents a challenge — 27.4 million consumers are looking to cancel their subscriptions because of friction and cost concerns. In the latest Subscription Commerce Conversion Index, PYMNTS reveals the five key features that can help companies keep subscribers loyal despite today’s challenging economic times.

Click to comment