As a payroll cost-reducing tactic, paying salaried employees via fee-heavy debit cards has become very popular among retailers, especially QSRs. But the owner of a group of 16 McDonald's restaurants in Pennsylvania has stopped making it the only payment option, after a former employee sued the franchisee. The issues are that the fees add up quickly with a low-paying job and whether an employee should have to pay anything to get the salary they've been promised.
The Pennsylvania franchisee will now give employees the option of getting paid via direct deposit or paper check, company spokesperson Christina Mueller-Curran told The Associated Press on Monday (July 1), adding that employees will continue to have the ability to use payroll cards.
The company introduced the payroll card about 18 months ago because many of its 800 employees did not have bank accounts, and were being charged to cash checks, Mueller-Curran said. "We didn't hear any complaints. Many employees have been using these cards without complaint for many months. When it became apparent there were some employees who may want the choice, we're going to give them the choice," she said.
The former employee who sued, Natalie Gunshannon, said that she was subject to withdrawal fees because she did not live anywhere near a branch of JPMorgan Chase, the payroll card issuer, according to the AP story. Gunshannon's lawyer, Michael J. Cefalo, said the lawsuit will continue. He said the lawsuit seeks punitive damage because the company "willfully violated" state law that says employees should be paid by cash or check.
For those chains that want to offer the debit card to save the expense of paper checks and direct deposit, there is an easy alternative: Simply offer to reimburse the bank fees. That way, store associates get the benefit without the added cost. And if that expense makes the idea of offering the debit cards no longer attractive, point made.
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