When There’s a Fee to Get Your Pay
By Sarah Jaffe
In These Times
In the years since the financial crisis struck in 2008, it’s often been pointed out that gains for bankers have gone hand in hand with losses for workers. But few cases provide a better example of just how direct that relationship can be than that of Natalie Gunshannon, who says her employer put her in a situation that forced her to pay fees to one of the big banks just to access her wages.
Gunshannon, of Dallas Township, Penn., filed a class action lawsuit this week against a McDonald’s franchise where she worked, claiming that she and other workers were paid not through check or direct deposit, but through a pre-paid JPMorgan Chase debit card. Along with her card, her lawsuit alleges, she received a list of fees she’d incur when she used it: $1.50 for ATM withdrawals; $5 for over-the-counter cash withdrawals; $1 per balance inquiry; 75 cents for online bill pay and $15 if she lost the card or had it stolen from her.
“I need to receive all the money I earn,” Gunshannon, who was being paid around $7.44 an hour, told a local newspaper. “I can’t afford to lose even a few dollars per paycheck. I just think people should be paid fairly and not have to pay fees to get their wages.”
The lawsuit, filed by attorney Mike Cefalo of Cefalo & Associates and provided to In These Times by the firm, alleges that the cards violate the Pennsylvania Wage Payment and Collection Act, which provides that “Wages shall be paid in lawful money of the United States or check.” The suit further alleges that the fees reduce the actual wages workers receive—in some cases bringing them below minimum wage, which in Pennsylvania remains at the federal minimum wage rate of $7.25 per hour.
The lawsuit also notes that managerial employees were paid by regular direct deposit; only hourly workers were stuck with the cards and the fees.
In a statement, Albert and Carol Mueller, the owners of the McDonald’s in question, said that they could not comment on the case, and added, “We are committed to providing them the best possible work environment so [employees] can deliver the fast, reliable service that our customers expect.” (McDonald’s Corporation did not return a request for comment.)
These “payroll cards,” which after being loaded with wages work like a regular debit card, are growing increasingly popular as companies look for alternatives to paper checks and payroll services. Like most debit cards, payroll cards can be used to purchase goods, or they can be used to make withdrawals from banks or ATMs. JPMorgan Chase is one of several banking companies, including Bank of America and U.S. Bank, that offer them.
JPMorgan's website touts its “Prepaid Card Solutions” as an efficient and cost-effective way to pay employees, calling them a “direct deposit alternative for unbanked and underserved employees.” Cost-effective, apparently, for the employer—who transfers the cost of the service to the workers themselves. As the Consumer Financial Protection Bureau—the government office founded by Elizabeth Warren to inform consumers of their rights when dealing with financial products—explains, employers make arrangements with the financial institution as to the terms of the cards, including “any fees that may be charged to [the employee].”
According to the CFPB, employers “typically” offer the card as one of several payment options and advise employees who opt for the payroll card to read the terms and conditions carefully. But according to Gunshannon’s lawsuit, when she asked if she could be paid another way, she was told, “If you don’t activate the card, there is no way for us to pay you.” She quit, and called a lawyer.
Nickeled and dimed
Fast food workers like Gunshannon are some of the lowest-paid workers in the country. As many have noted, it’s expensive to be poor, with lower-income people paying more for, among other things, basic financial services. A recent study released by the Fast Food Forward campaign—the union- and community group-backed campaign to organize New York City’s fast food industry—and performed by research firm Anzalone Research found that 84 percent of fast food workers surveyed said they had been the victims of wage theft in some form. Jonathan Westin, campaign director of Fast Food Forward and executive director of New York Communities for Change, said at the time, “The [wage theft] epidemic is preying on the city’s most vulnerable residents—the men and women who make $7.25 / hour and are the least able to afford it.”
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