Payroll cards have been hit with a new controversy.
Only days ago, an employee of the restaurant chain Dave & Buster’s filed a lawsuit against the company over its payroll practices. Filed last week, the suit accuses Dave & Buster’s of forcing employees to be paid via payroll card for their first and last month’s paychecks.
The lawsuit also claims that those payroll cards forced unfair fees on employees when they wanted to withdraw the funds, reports said, an increasingly common complaint about the payroll tool.
The plaintiff, MaKenna Banks, alleges that this payroll policy means Dave & Buster’s failed to pay their employees at or above the federally required minimum wage and overtime rates. The suit was filed in Oregon.
Reports said the lawsuit is not requesting a specific amount of financial compensation but is instead requesting that Dave & Buster’s change its payroll card policy. It is also seeking the restaurant to pay lawyers’ fees, as well as other relief “as the court deems appropriate.”
In an interview with local news platform KATU, Banks’ lawyer, Jon Egan, highlighted the issue the lawsuit is raising over payroll cards.
“You have to pay a fee to check your balance, and you can’t take all your money out on payday,” Egan said.
He also pointed to increasing national awareness of these issues.
“A lot of big, national employers are shifting to these pay cards because it reduces their administrative fees for printing these paychecks. Some of them even get a kickback,” said Egan. “The companies are saving money, but the employees are having to sign away their rights in court, and also, they can’t get all the money off the card.”
While Dave & Buster’s hadn’t issued a comment to KATU as of last Friday (Sept. 2), the Oregon Bureau of Labor and Industries (BOLI) did.
“If you are a minimum wage worker and there is a fee associated with the debit card, that’s a potential minimum wage violation if it dips you below the minimum wage,” said BOLI spokesperson Charlie Burr. “Or if you’re making more than the minimum wage. If you’re making $10 per hour, you should be paid $10 per hour.”
“It shouldn’t cost you anything to access your payment,” Burr added.
That sentiment echoes other states’ legislative efforts to protect workers from payroll card fees. Earlier this year, the New York State Department of Labor published proposed regulatory changes for payroll cards, which included rules that ban employers from forcing employees to accept payroll cards to get paid.
The rules also suggest that employees cannot pay fees to access their wages, while employers would be required to notify employees where they can withdraw funds from their payroll cards without fees.
The issue of payroll cards has surfaced in other states, too. An ongoing lawsuit in Pennsylvania accuses McDonald’s and its payroll card issuer, JPMorgan Chase, of similar claims seen in the Oregon suit. That case was certified as a class action in 2015.
Last May, similar allegations against restaurant behemoth Darden Restaurants, parent company of Olive Garden, surfaced when the Restaurant Opportunities Centers United accused Darden of switching to payroll cards to save money, despite the cards forcing employees to pay fees to withdraw their wages. In response, Darden said it would add additional ATMs to its list of locations that allow employees to withdraw funds without fees.
But with all of the controversy, some payroll advocates are stepping up to champion the tool.
Proponents say payroll cards offer a way for underbanked employees to get paid, access funds and manage their finances.
Visa Senior Director of Global Prepaid Products Jill Goebel, for instance, said payroll cards can be safer and more convenient than paper paychecks for employees. Goebel issued a statement following the publication of the Getting Paid in America report by the American Payroll Association in 2015.
“This year’s results show employers and card providers are helping their employees understand the best ways to use their cards,” Goebel said about the report’s findings. According to the research, 75 percent of employers explain fees associated with payroll cards to their staff.
Further, following the controversy over Darden’s payroll card policies, payroll card firm SOLE published a blog post highlighting what it declared were misconceptions surrounding the payroll tool.
“The reality is that the card is a replacement for a traditional bank account. Employees can make point-of-sale transactions, get cash back and pay bills online at no cost,” SOLE wrote. The company also highlighted state regulations that protect employees that use payroll cards.
“Paycards are only costly when used incorrectly,” SOLE added.
Earlier this year, MetaBank President Brad Hanson also advocated for the payroll card after it announced in February that it had renewed its partnership with payroll card firm Global Cash Card.
“Let’s put it this way,” Hanson told PYMNTS. “Employers that offer payroll cards and consumers that use payroll cards are more knowledgeable about their pay. They’re more likely to save and, I think, in general, are better off than consumers that don’t have access to payroll cards.”