Pa. Lawmakers Propose Payroll Card Ban; New Class-Action Suit Alleges Payroll Card Abuse (Nov. 4, 2013)
Payroll cards are coming under fire again, after lawmakers in Pennsylvania last week proposed a ban on all payroll cards and a new lawsuit filed in federal court in California alleges payroll card abuses by a major U.S. apparel maker. The moves suggest more challenges ahead for payroll card companies, which came under attack earlier this year when a lawsuit was filed in Pennsylvania against a McDonald’s franchisee related to its payroll card and coverage in the New York Times mischaracterized how payroll card programs usually operate. Investigations from the New York attorney general and federal lawmakers followed, along with a September CFPB bulletin reminding employers they cannot require employees to receive wages on a payroll card.
Pennsylvania’s bill, which was referred to committee, would completely ban payroll cards. The bill, sponsored by Rep. Ed Neilson (D-Philadelphia County), proposes an amendment to the state’s 1962 wage payment and collection laws specifying that “wages may not be paid via payroll debit card.” While most states are taking a regulatory approach to supervising payroll card programs, the move by Pennsylvania legislators is “extremely precipitous” and “unnecessary,” Judith Rinearson, a partner at Bryan Cave LLP and chair of the Government Relations Working Group at the Network Branded Prepaid Card Association (NBPCA), tells Paybefore. “It is not fair to consumers who are overall generally happy with their payroll cards. Hopefully Pennsylvania employers and consumers will be able to convince the state legislators to take a different tack,” Rinearson said.
In California, attorneys representing numerous employees of apparel maker PVH Corp. on Oct. 29 filed a class-action lawsuit alleging that the company violated California’s labor code by forcing employees to accept payment via payroll cards that carried fees driving their pay below minimum wage. The suit alleges that PVH employees without bank accounts were “given no choice” but to be paid through a payroll card program that carried fees including a $1.50 monthly maintenance fee, 50 cents to check balances via ATMs and 25 cents for each PIN-debit transaction, among other fees. New York-based PVH Corp. is one of the world’s largest apparel companies, marketing the Calvin Klein and Tommy Hilfiger brands, according to its Website.