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Posts Tagged ‘Alan Pyke’

How A Giant Restaurant Conglomerate Teamed Up With Banks To Stiff Its Workers

Friday, May 13th, 2016

AlanPyke_108x108The struggling corporate giant behind The Olive Garden, Longhorn Steakhouse, and other national restaurant chains is forcing tens of thousands of workers to effectively pay rent on their own money.

Workers at Darden Restaurants chains are routinely told they must accept prepaid debit cards instead of paychecks, according to a new report from the worker organization Restaurant Opportunities Center (ROC) United. A quarter of workers surveyed said they asked to be paid some other way and were told the cards are their only option.

The practice helps the company, which came under intense pressure to cut costs from dissatisfied investors a couple years back. But it puts an expensive barrier between workers and their money.

The restaurant conglomerate has roughly 148,000 employees in the U.S. Half of those workers get payroll cards in lieu of standard paper checks. Each card shaves about $2.75 per pay period off of the company’s overhead, saving Darden as much as $5 million per year.

Darden’s bottom-line bliss means pain and chaos for those 70,000-plus workers. The cards come with a litany of fees: 99 cents for using it to pay utility bills, 50 cents if the card is declined at a cash register, $1.75 to withdraw money from an out-of-network ATM and 75 cents just to check the card’s balance. If a worker loses her card, she’ll pay $10 to have it replaced.

As Darden cuts its administrative costs, the banks that provide the cards rack up significant income on the back end. Federal Reserve Bank of Philadelphia researchers put median bank earnings at $1.75 per card per month back in 2012. That suggests Darden’s financial partners are pulling down about $1.5 million a year

Three in four Darden workers get hit with the out-of-network withdrawal fees, according to ROC United’s survey of 200 workers who are paid with cards. Half of them have no access to an in-network ATM near where they live or work, effectively guaranteeing they will be paying fees to access their own money.

And the $1.75 withdrawal fee is only on the card-maker’s side of the transaction. The out-of-network ATM itself will tack on another surcharge, averaging $2.88 per withdrawal — and pushing the worker’s cost to access their pay up to nearly $5 each time they convert the payroll card to actual cash.

More than half of the workers report having a balance hold placed on their cards after using them at a gas pump, a practice gas stations adopted to combat theft when pump prices were up near $4 a gallon. For a restaurant worker whose payroll card is based on the tipped minimum wage — as little as $2.13 an hour — there is hardly any slack to the card’s balance to begin with. Gas station holds can freeze as much as $100 at a time, but even the standard $50 hold can easily mean that the next time that worker swipes her card to pay for something, the machine will see an insufficient balance — and the payroll card company will hit the worker with another 50-cent fee for having her card declined.

Payroll cards like Darden’s have proven popular with low-wage employers in recent years. More than 7 million workers nationwide are now paid using the cards, the report notes — mostly at companies like Darden and McDonald’s that pay workers so poorly that they remain eligible for public assistance programs despite working full time.

The cards proliferated over the past decade, with advocates arguing they would benefit employees as well as generate savings for employers and revenue for banks. Employees without a bank account would avoid check-cashing fees, card proponents noted. But the cards’ own fees aren’t necessarily much cheaper — if at all — and many Darden workers who do have bank accounts report being denied access to standard payroll practices that would avoid fees altogether. One overall evaluation of the pros and cons of the cards from the National Consumer Law Center in 2013 hinged on this question of worker choice, and found the cards could be net beneficial so long as everyone has the chance to opt for a different mode of payment.

In at least one case, card fees ended up pushing workers’ take-home pay below the minimum wage. The workers sued the McDonald’s franchisee who they say forced them to accept the cards as payment, and Chase Bank did something out of character for a high finance powerplayer: It voluntarily gave money back to the workers, refunding all of the fees their payroll cards had incurred.

That case prompted a spate of state legislative actions to police the use of payroll cards more tightly, the ROC United report notes, but roughly half of the states still have no law governing the practice. And even the states that do regulate it in some fashion do not necessarily guarantee workers can access their pay fee-free.

UPDATE MAY 12, 2016 4:07 PM

A Darden representative told ThinkProgress the ROC United report is “completely false,” save for the out-of-network ATM fees and the 50-cent fee for point-of-sale denials, and accused the group of “wag[ing] a campaign of harassment and disparagement against our company for five years.” Starting June 1, those 50-cent fees will disappear, and employees will be able to use an additional 29,000 ATMs nationwide without paying fees, up from 50,000 currently. It is impossible that some managers tell workers the cards are required despite company policy to the contrary, spokesman Rich Jeffers said. “That’s just not the nature of our people, of our leaders in our restaurants,” he said.

This blog originally appeared at Thinkprogress.org on May 12, 2016. Reprinted with permission.

Alan Pyke is the Deputy Economic Policy Editor for ThinkProgress.org. Before coming to ThinkProgress, he was a blogger and researcher with a focus on economic policy and political advertising at Media Matters for America, American Bridge 21st Century Foundation, and PoliticalCorrection.org. He previously worked as an organizer on various political campaigns from New Hampshire to Georgia to Missouri. His writing on music and film has appeared on TinyMixTapes, IndieWire’s Press Play, and TheGrio, among other sites. Follow @PykeA on Twitter.

Strangers Raise Money For Walmart Worker Fired For Picking Up Cans

Sunday, November 22nd, 2015

AlanPyke_108x108When a parking lot attendant dared to recycle trash he picked up outside an upstate New York Walmart, the store fired him. Now generous strangers are trying to help cushion his sudden fall.

Thomas Smith, 52, had been earning $9 an hour at an upstate New York Walmart for less than three months when his manager terminated him over the cans. Smith was in charge of rounding up shopping carts from the lot outside the store, and started collecting trash from the lot while making his rounds. After storing up cans for a couple months, he recycled them in the store’s machines in early November. He got $5.10 for them.

Then he got fired. His manager told Smith his actions were “tantamount to theft of Walmart property,” the Albany Times Union reports, and said he would have to repay the $5.10 or lose his job. Smith, who commuted an hour by bus from Albany for the job, returned to the store two days later with the cash. But he’d already been fired.

“I didn’t know you couldn’t take empties left behind. They were garbage. I didn’t even get a chance to explain myself,” Smith told the paper. He also said his manager told him that a coworker who’d been caught stealing cash from a store register was allowed to keep her job because she repaid the theft and “because she has five kids.”

That thief was white. Smith collected trash while black.

The store manager who made the decision refused to speak with the Times-Union, and a Walmart spokesman told the paper it does not comment on personnel matters. After the story got picked up by local TV news, a company representative claimed Smith had admitted to stealing from inside the store itself. “They certainly didn’t indicate that both when I talked to them and our attorney talked to them,” Alice Green of the Center for Law and Justice said of that claim. Smith says he wrote out a statement for managers acknowledging he’d recycled the cans and no more.

Smith’s story has prompted strangers to send money through the crowdfunding site GoFundMe. So far the effort has collected more than $2,200 – an amount Smith would’ve had to work more than six weeks at full-time hours to earn.

While going viral for his sudden termination from a low-wage job has provided some short-term help, Smith will likely still have a hard time getting back on his feet. He was paroled in May after more than a dozen years in prison for armed robbery. He’d spent four months homeless after his release before finding housing through a charitable group. The Walmart job would have been one of his first, if not his very first, opportunities since his release for earning a living and achieving a degree of economic independence.

Formerly incarcerated people face immense hurdles to re-entering society and the workforce. Trust is hard to come by. Many job applications feature a check-box requiring applicants to volunteer information about their criminal history, which generally ruins their chances of even getting an interview.

The rejection naturally encourages desperate people to return to criminal activity for an income, as Glenn Martin, who now runs a non-profit that works with the formerly incarcerated and wasturned away from 50 different jobs in the month after his own release from prison, has described. Activists like Martin say efforts to reform the criminal justice and prison systems should include “ban the box” measures to restrict how hiring managers can ask about criminal histories – something President Obama recently did for federal hiring practices – and a revamp of education programs behind bars.

Since being fired, Smith has gotten plugged in with a legal aid group in Albany that is helping him recover his footing and that may eventually help him sue Walmart over his treatment. For now, though, he’s more worried about how he’s going to buy Christmas presents for his two teenage children.

This blog was originally posted on Think Progress on November 20, 2015. Reprinted with permission.

About the Author: Alan Pyke is the Deputy Economic Policy Editor for ThinkProgress.org. Before coming to ThinkProgress, he was a blogger and researcher with a focus on economic policy and political advertising at Media Matters for America, American Bridge 21st Century Foundation, and PoliticalCorrection.org. He previously worked as an organizer on various political campaigns from New Hampshire to Georgia to Missouri. His writing on music and film has appeared on TinyMixTapes, IndieWire’s Press Play, and TheGrio, among other sites.

California Labor Ruling Deals A Blow To Uber’s Strategy For Denying Drivers Benefits

Friday, June 19th, 2015

AlanPyke_108x108Uber must pay its drivers benefits, overtime, working expenses, and other standard compensation that the company has thus far avoided providing, the California Labor Commission has ruled.

The decision is not self-executing across the state and can only be directly applied in one specific driver’s case. But it signals to the company’s other employees that the body charged with adjudicating California labor law views Uber to be an employer with all the obligations that come with the label. Uber notes in a statement that the same commission had ruled the opposite way in a 2012 case, and that neither of those rulings would be binding in any other individual lawsuit over similar complaints by other drivers.

The ridesharing start-up, whose market value recently hit $50 billion, has relied upon paying drivers as though they were independent contractors rather than employees. Classifying a worker as a contractor negates most provisions of federal labor law, saving an employer thousands of dollars per year for each person they treat as a contractor.

If a company treats a contractor like an employee by exerting substantial control over day-to-day job activities, though, it risks being found guilty of misclassifying workers. Misclassification is a widespread problem, with complaints popping up everywhere from trucking to strip clubs to beauty parlors.

In California, Uber argued that its relationship with drivers is not controlling enough to constitute an employer-employee relationship, pointing out that they don’t set drivers’ hours or require a minimum number of trips in a shift. But California’s definition of the line between employment and contract work is primarily based on whether the worker is providing a service that’s integral to the main line of business of the company paying her. Labor commission lawyers examined Uber’s policies for drivers and overall business model and found the company’s argument weak.

“Defendants hold themselves out as nothing more than a neutral technological platform, designed simply to enable drivers and passengers to transact the business of transportation. The reality, however, is that defendants are involved in every aspect of the operation,” the commission ruled. By vetting would-be drivers, requiring them to register their vehicles with Uber, and terminating them if their approval ratings dip too low, the state found, Uber positioned itself as an employer rather than a non-controlling party to a contract.

The case that generated the ruling will only cost Uber about $4,000 in reimbursement payments to a driver named Barbara Ann Berwick. But its consequences could be much grander. If it cannot successfully appeal the finding, it will have to choose between fielding further individual lawsuits or reclassifying all its California drivers as regular employees to pre-empt the suits. That means paying unemployment insurance and other payroll taxes that aren’t triggered for contractors, as well as potentially being subject to overtime rules and made to reimburse drivers for work expenses like gas, tolls, and some traffic tickets.

Any multi-billion-dollar corporation should theoretically be able to absorb such costs. But they threaten to turn Uber into a much smaller-margin enterprise, one more akin to the traditional taxi company business model that the firm has made so much money disrupting. And because Uber’s market value is a fluid, on-paper number that depends on investor confidence and market analyst’s reading of the economic tea leaves, the California ruling could lead to some shrinkage in the car service’s worth and ability to raise private funds.

The ruling isn’t the end of the story, either. There are other civil cases outstanding in California and elsewhere that touch on similar issues and could be decided differently. And the sheer variety of different driver experiences, from people who drive a few hours a week for supplementary income to those who log long hours in vehicles leased from the company itself, suggests that it’s hard to pin down the entire category of workers with either the “employee” or “contractor” label that the law provides.

This blog was originally posted on Think Progress on June 17, 2015. Reprinted with permission.

About the Author: The author’s name is Alan Pyke. Alan Pyke is the Deputy Economic Policy Editor for ThinkProgress.org. Before coming to ThinkProgress, he was a blogger and researcher with a focus on economic policy and political advertising at Media Matters for America, American Bridge 21st Century Foundation, and PoliticalCorrection.org. He previously worked as an organizer on various political campaigns from New Hampshire to Georgia to Missouri. His writing on music and film has appeared on TinyMixTapes, IndieWire’s Press Play, and TheGrio, among other sites.

After Ruling That McDonald’s Can’t Pay Workers In Bank Cards, The Bank Pays Up

Friday, June 5th, 2015

AlanPyke_108x108Paying employees through prepaid debit cards that incur fees when workers try to withdraw their cash is illegal in Pennsylvania, a judge ruled Tuesday. The lawsuit targeting a McDonald’s franchisee in the eastern-central part of the state has already prompted a powerful Wall Street bank to voluntarily give money back, a lawyer for the plaintiffs told ThinkProgress on Wednesday.

The case began in 2013 after a woman named Natalie Gunshannon sued a couple who own and operate multiple McDonald’s franchises in the state. The owners, Carol and Albert Mueller, had been using payroll debit cards provided by JP Morgan Chase rather than traditional paychecks or direct deposit payroll systems. After Gunshannon filed suit, the couple began offering direct deposit and traditional checks as alternatives to the payroll cards, which had previously been workers’ only option.

Gunshannon and other workers faced a $1.50 charge every time they used an ATM to access their wages, and a $5 charge for withdrawing the money over the counter at a cash register. Where a worker who misplaced a standard paycheck would be able to get a replacement check, the JP Morgan Chase prepaid cards charged a $15 replacement fee if lost or stolen. Paying bills online with the card meant spending an additional 75 cents on bank fees, and merely checking the balance of a card triggered a $1 fee.

The Muellers’ hourly workers were charged such fees nearly 47,000 separate times from the fall of 2010 to the summer of 2014, according to an expert witness in the case. That works out to roughly 20 separate fees per person in the class over a 45-month period.

Store managers, meanwhile, were offered direct deposit forms to receive their pay without facing the card fees.

When Gunshannon’s claim gained class action status earlier this year, all 2,380 hourly workers at the Muellers’ chain were able to join the case. Each of those workers would be entitled to a $500 damages payment plus the reimbursement of all the fees they were charged by the payroll cards, should the Muellers’ appeal of Tuesday’s ruling ultimately fail. In that case, the couple would have to pay out roughly $1.2 million in damages, unless they are able to strike a settlement with the workers’ attorneys.

Because the class action decision raised the stakes so significantly, that May ruling was in some ways a bigger deal than Tuesday’s finding that the Muellers had broken the law. The class status ruling in May certainly got Chase’s attention, plaintiffs’ attorney Michael Cefalo told ThinkProgress.

“Our lawfirm became bombarded with telephone calls. All of the class members were getting a form letter from Chase saying, we have decided to refund you all of the fees you have paid Chase,” Cefalo said. “We were shocked.” The voluntary payments from Chase ranged from as little as a penny to as high as $148, the attorney said. A call to the bank’s press office about the payments was not immediately returned.

The checks do little to shield the Muellers from the potentially backbreaking damages payments mandates by Pennsylvania’s Wage Payment and Collection Law. And while the money is nice, Cefalo said, it doesn’t erase what the McDonald’s franchisees and Chase did to his clients.

“Say I come up to you and I have an armed robbery, and then I say ‘I’m sorry, here’s your money back.’ I still committed a robbery,” he said. “You still paid ‘em the wrong way.”

The Muellers’ attorneys told Law360 they intend to appeal Tuesday’s ruling. They may yet succeed in persuading a different judge that the payroll cards fit the state’s definition of legal payment. In Tuesday’s decision, Judge Thomas Burke himself acknowledged that the relevant state law was written in 1961, and the technological progress in payments technology since then may cloud the case. He also asked the state’s Department of Labor and Industry to issue a formal administrative position on whether or not payroll cards that charge user fees are equivalent to cash or checks. The agency has previously said the cards are legal payment, but only in a non-binding advisory letter, according to Law360. A call to the agency for comment was not returned.

Payroll cards such as those the Muellers used are legal in many states, despite the fees that eat into workers’ wages. A handful of state legislatures are weighing new rules to govern the use of such cards, including Pensylvania itself and Washington state. The Consumer Financial Protection Bureau is working on regulations for a wide range of different prepaid debit cards including payroll cards like those in the Mueller case. The agency has warned employers that they must make alternative forms of payment available for any worker who doesn’t want the cards, and is currently soliciting comments on a proposed federal regulation.

With millions of Americans lacking access to banking services, the cards can be an important and beneficial tool for workers so long as they come with the right safeguards, the National Consumer Law Center has argued. Close to 5 million people were paid through such cards in 2012, a number projected to double by 2017. Similar prepaid debit cards are also being used in some cases to pay public benefits such as unemployment insurance. The banks that provide the cards and charge the fees are trying to recoup some of the profit they lost when Dodd-Frank regulations curtailed their old business practices involving fees for standard debit cards.

This blog was originally posted on Think Progress on June 3, 2015. Reprinted with permission .

About the Author: The author’s name is Alan Pyke. Alan Pyke is the Deputy Economic Policy Editor for ThinkProgress.org. Before coming to ThinkProgress, he was a blogger and researcher with a focus on economic policy and political advertising at Media Matters for America, American Bridge 21st Century Foundation, and PoliticalCorrection.org. He previously worked as an organizer on various political campaigns from New Hampshire to Georgia to Missouri. His writing on music and film has appeared on TinyMixTapes, IndieWire’s Press Play, and TheGrio, among other sites.

The Bizarre, Shania Twain-Based Argument For Keeping McDonald’s Wages Low

Wednesday, May 27th, 2015

AlanPyke_108x108It’s a good thing for pop music, honky-tonk feminism, and Canadian tax collectors that McDonald’s pays lousy wages. If the food stores paid their frontline workers enough to survive on, Shania Twain would still be working there, a shareholder claimed at the company’s annual meeting this week.

The unidentified man, who said he’d been a McDonald’s investor since 1990 according to BuzzFeed News, used a Q&A session to rattle off a list of successful celebrities like Twain, Amazon’s Jeff Bezos, and Hollywood star Sharon Stone who had worked in a McDonald’s earlier in their lives. “I’m sure if they were making $15 an hour, they’d still be working at McDonald’s,” he said, as thousands of current McDonald’s workers protested outside.

Twain has now been making music professionally for about as long as the anonymous commentator has held McDonald’s stock. But in high school, the future star worked at an Ontario McDonald’s. “I learned tons about the meaning of service there,” she told Time in 2002. As an elementary school-aged kid, she’d been singing in talent shows and open mics.

Twain’s parents were killed in a car crash when the singer was in her early 20s. She kept singing, now at a vacation resort, to support her three younger siblings. By 1991, she had a small contract with a Nashville country label. Her second album and subsequent hits made her a superstar by the late 1990s.

It is of course possible that the orphaned college-aged Twain would have stayed in the hamburger business instead of pursuing her musical talent. Attempts to contact Twain’s representatives were unsuccessful.

The minimum wage in the early 1980s in Ontario was about $2.85 an hour, in American dollars, which had the same buying power as $6.72 per hour today. McDonald’s recently committed to paying at least $1 above the local minimum wage in the roughly 10 percent of store locations that it directly controls, meaning that many of the company’s workers are already earning well above what Twain did even after adjusting for inflation.

It’s hard to fathom how moving those workers up to $15 an hour would generate such a comfortable living that frycooks with enough star power to get them noticed would instead settle for a career inhaling grease fumes. Someone working full-time without vacations at $15 an hour would earn about $31,200 per year, before taxes. But to survive for a year in Green Bay, Wisconsin — a blue-collar town across the Great Lakes from the mining town where Twain grew up — a family of two would need roughly $48,000 per year in income according to the Economic Policy Institute’s Family Budget Calculator. For the sort of household Twain lead after her parents’ deaths, with three children and one head-of-household, it’d take about $89,121 a year to afford housing, child care, health care, taxes, food, and transportation for the year in Green Bay.

 

$15 an hour wouldn’t support a family, then, but it would mean that McDonald’s workers could stop relying on food stamps and other public assistance programs. The company is only able to pay wages so far below the cost of living because anti-poverty programs are there to step into the gap. McDonald’s low wages are effectively subsidized by taxpayers to the tune of millions of dollars per year.

The shareholder’s broader argument — that McDonald’s is a stepping stone rather than a career, and that it pays accordingly — is similarly flimsy on the evidence. Low-wage jobs like these are far more likely to be a dead end than the opening stride up the career ladder. The common perception that most fast food workers are young people just starting into the job market is incorrect. Most are adults, not dependents making extra money over the summer to mollify their parents. And a full 20 percent of all American children has a parent like Alicia McCrary who works the kind of job that would benefit from a higher minimum wage.

McDonald’s is undeniably aware of how far away from economic security it leaves its people. Until recently, the company maintained a public website with a sample budget for workers that included such fanciful projections as spending $0 on heating a home and getting health insurance for $20 a month. It has also recommended that struggling workers sell their Christmas presents for cash to make ends meet.

 

McDonald’s continues to hold out against protests, strikes, and legal challenges to its business model after more than two years of sustained worker agitation for the higher wage and union representation. If the company won’t go to $15, the $15 hourly wage may come to it. This week, Los Angeles became the second American metropolis to adopt the $15 minimum wage, following in Seattle’s footsteps from last year. State and local governments elsewhere have been raising their minimum wage laws significantly in recent years as well. The momentum for significantly higher pay in service-sector jobs has already induced some major retailers to voluntarily raise their pay in the same limited way that McDonald’s has done. Competitors from Costco to Wegman’s to Seattle-area burger chain Dick’s Drive In have built their business model around paying a living wage and valuing workers as an asset rather than targeting them as a cost-cutting opportunity. And while fast food companies sometimes protest that they couldn’t afford to do business at a $15 hourly wage, that argument doesn’t impress economists much.

This blog was originally posted on Think Progress on May 22, 2015. Reprinted with permission.

About the Author: The author’s name is Alan Pyke. Alan Pyke is the Deputy Economic Policy Editor for ThinkProgress.org. Before coming to ThinkProgress, he was a blogger and researcher with a focus on economic policy and political advertising at Media Matters for America, American Bridge 21st Century Foundation, and PoliticalCorrection.org. He previously worked as an organizer on various political campaigns from New Hampshire to Georgia to Missouri. His writing on music and film has appeared on TinyMixTapes, IndieWire’s Press Play, and TheGrio, among other sites.

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