Defendants Appeal Judge’s Refusal to Dismiss McDonald’s Class-Action Suit in PA (Oct. 8, 2015)
Two McDonald’s franchise owners have appealed a judge’s refusal to dismiss a class-action lawsuit alleging they illegally mandated employees be paid via prepaid cards. Albert and Carol Mueller, who own 16 McDonald’s locations in Pennsylvania, were sued in 2013 on behalf of more than 2,300 plaintiffs for allegedly violating state wage laws by paying employees exclusively by prepaid cards. Pennsylvania’s Wage and Payment Collection Law requires wages to “be paid in lawful money of the United States or check.”—the Muellers maintained that a prepaid card was the “functional equivalent” of a check. (Soon after the suit was filed, they reportedly began offering employees the option of being paid by direct deposit, paper check or payroll card.) In late May, the county court judge in the case, Thomas Burke, denied the defendants’ request for summary judgment, paving the way for the class-action suit to move forward. However, Burke at the time noted that the legislators who wrote the Wage and Payment Collection Law—which dates back to 1961—did not contemplate the concept of payroll cards. He added that “reasonable minds could differ,” on the issue of whether payroll cards and checks were equivalent, and noted that the state legislature was working on a new bill specifically regulating wage payment via payroll cards.
Late last month, in a filing with the Pennsylvania Superior Court, the defendants appealed Judge Burke’s decision to let the class action move forward. Proceedings in the suit have been postponed while the Superior Court reviews the matter.
Payroll cards came under fire in the summer of 2013, when a front-page story in the New York Times claimed that a significant number of employers, including the Muellers, were forcing hourly workers to accept wage payments via prepaid cards with high usage fees. Lawmakers then took aim at payroll cards and several other class-action lawsuits were filed alleging employer payroll card programs violated state wage laws. Payments industry observers, however, argued that the story didn’t present the issue accurately, mischaracterizing how payroll card programs usually operate and overstating fees. The payments industry also has worked to develop standards for payroll cards, including standards from MasterCard and the Center for Financial Services Innovation.