As McDonald's (NYSE:MCD) franchisees start to fight litigation against their efforts to pay employees via debit card, each group is defending itself its own way. A Pennsylvania McDonald's franchisee, for example, has filed a response that the employee—who chose not to activate the card because she objected to the many associated fees—has no legal standing, explicitly because she never ended up using the card and, therefore, never paid any fees.
The filing, from Albert and Carol Mueller, whose company owns 16 McDonald's restaurants, also argued that debit cards are legal tender and that employees agreed to that payment method when they were hired. The question, of course, is whether that was a knowing agreement. Did they discuss it with employees or was it simply buried in the fine print of a lengthy employment offer letter?
The court could also delve into the trickier area of whether such a requirement was acceptable in that community. If an agreement, to cite an extreme example, said that employees must accept payment in pennies and that each penny would have to be picked up at a different location, a judge could easily rule that such a requirement was unacceptable, even if employees had agreed to it.
A more interesting argument made by Mueller is that employees did in fact not have to pay any fees, as long as they used the debit card at one specific nearby bank, one where the Muellers had made an arrangement. The filing discussed the situation of the employee who sued, Natalie Gunshannon.
"After Gunshannon was hired in April, managers explained the payroll card system and told her multiple times she 'could withdraw the entire pay amount without incurring any fees at the bank across the street from the Shavertown restaurant,'" the filing said, according to a story in The Wilkes-Barre Citizens' Voice. "Gunshannon 'voiced no concerns' about the system and then filled out the application for the JP Morgan Chase payroll card."
That is a nice courtesy to have offered employees. But courts tend to have very strong feelings about paychecks and that it's one of the most fundamental of worker rights, namely to get paid in a timely and convenient fashion. If the employee would be exposed to those fees at any bank other than the one suggested by the Muellers, that might not pass the reasonability test. What if the deal had been cut for all Chase locations? That might be stronger, assuming there were enough local Chase branches. What if they had negotiated deals with every bank within 5 miles of their restaurants?
Different courts are likely to impose different local standards on what is acceptable. In general, though, offering paychecks that can be redeemed anywhere with no fees is the easiest route.
- See this Citizens' Voice story
McDonald's Pushes More Costs On Franchisees, Who Meet To Push Back
Walmart, Walgreens, McDonalds Targeted By NY AG For Using Payroll Debit Cards
McDonald's Franchisee Reverses On Forcing Employees To Be Paid Via Debit Cards