Employee Sues McDonalds Over Pre-Paid Debit Card Payroll Policy
June 19, 2013
Natalie Gushannon, a single mother who worked for the McDonalds Corporation in Pennsylvania, has filed a lawsuit which claims that because her paycheck was placed on a pre-paid debit card, she has the potential of incurring a $1.00 fee to check her balance, a $1.50 fee to withdraw cash from the card and a $15 fee to replace a lost card.
Gushannon earned $7.44 an hour which is just above the minimum wage line of $7.25, and after the fees taken out by JP Morgan Chase because of the pre-paid debit card, Gushannon took home less money.
Gushannon was told by her employer that if she did not “activate the card” there would be no way for her to receive her paycheck.
According to the suit: “McDonald’s does not provide a choice for hourly employees to receive their justly earned wages through a bank check, cash or direct deposit.”
This suit is justified under the Pennsylvania Wage Payment and Collection Act under the rule of unjust enrichment.
Gushannon said that JP Morgan Chase was used for her payroll and was her only option as far as extracting her paycheck from McDonalds.
Michael Cefalo, lawyer for Gushannon said that both JP Morgan Chase and McDonalds were targeting “the most vulnerable” employees.
Gushannon said that she was forced to accept the pre-paid debit card as the only way she could receive her paycheck from her employer.
McDonalds franchisees Albert and Carol Mueller refused to allow Gushannon have her paycheck direct deposited into an account she holds at a credit union.
The Muellers claim: “We value our employees and everything they do for our organization. We are committed to providing them the best possible work environment so they can deliver the fast, reliable service that our customers expect. We are aware of this matter. But at this time, we have not seen a copy of the complaint. For this reason, it would be inappropriate for us to comment further.”
Cefalo said: “It’s a violation of the law. They’re entitled to a choice to be paid in cash or check. Fees connected to this debit card which employees have to pay to get their wages which is unfair.”
Suzanne Martindale explained that employers are given incentives by banks to provide these pre-paid credit cards.
Martindale said: “Employers are always looking for ways to cut costs. There is incentive for employers to offer these cards but in some cases, they don’t negotiate with the payroll card provider over fees.”
The Federal Deposit Insurance Company (FDIC) states that “nearly 4 million U.S. households, or 3.2 percent, have someone receiving wages on a payroll card.”
The National Consumer Law Center (NCLC) released a report in 2010 entitled “Public Benefits and Wages on Prepaid Cards: Protecting Against Hidden Fees and Identity Theft” which outlined that employers could use this new service provided by financial institutions to reduce the amount of checks delivered to employees and eliminate check fraud.
Retail out lets such as Walmart, the YMCA of greater Atlanta, the US Navy, Vermont Ski Resorts and the US federal government could and do take part in this scheme.
Payroll cards are worth anywhere from $20.9 billion to $62.2 billion to financial institutions that provide them to retailers and government payroll service agencies.