Outten & Golden: Empowering Employees in the Workplace

Posts Tagged ‘paychecks’

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.

Low-Wage Workers Hit Hardest by Workplace Injuries, Illnesses

Monday, December 17th, 2012

It’s a double whammy for low-wage workers when they get hurt or fall ill on the job.

First, they lose pay because the vast majority (more than 80%) of low-wage workers do not have any paid sick leave to take time off to recover. Second, not only does the pay check shrink, but because of inadequate workers’ compensation laws, they must shoulder a bigger portion of their health care costs with those smaller paychecks. That means workers and their communities must bear a larger share of the $39 billion (in 2010) that workplace injuries and illnesses cost the nation.  

A new policy brief, “Mom’s Off Work ’Cause She Got Hurt: The Economic Impact of Workplace Injuries and Illnesses in the U.S.’s Growing Low-Wage Workforce,” examines the growing problem.  

Using information from a study, by University of California, Davis, economist J. Paul Leigh, on the number and cost of injuries and illnesses among low-wage workers, Celeste Monforton, a professorial lecturer in environmental and occupational health at George Washington University School of Public Health and Health Services (SPHHS), and SPHHS researcher Liz Borkowski explore how workplace injuries and illnesses impact the lives of low-wage workers. Says Monforton:

Workers earning the lowest wages are the least likely to have paid sick leave, so missing work to recuperate from a work-related injury or illness often means smaller paychecks. For the millions of Americans living paycheck to paycheck, a few missed shifts can leave families struggling to pay rent and buy groceries.

Leigh’s study classifies about 31 million people—22% of the U.S. workforce—in 65 occupations for which the median wage is below $11.19 per hour as low-wage workers. The janitors, housecleaners, restaurant workers and others earning that wage full-time will bring home just $22,350 per year—an amount that means a family of four must subsist at the poverty line

In 2010, 596 low-wage workers suffered fatal on-the-job injuries and 12,415 died from occupational ailments, including certain kinds of cancer. Another 1.6 million suffered from non-fatal injuries, and 87,857 developed non-fatal occupational health problems such as asthma. The costs of the 1.73 million injuries and illness amounted to $15 billion for medical care and another $24 billion for lost productivity—the cost when injured or sick workers cannot perform their jobs or daily household duties.

But as Monforton and Borkowski point out, workers’ compensation insurance either does not apply or fails to cover many of these costs, which can bankrupt families living on the margin. In some cases, employers do not have to offer this kind of insurance to employees.

And even workers who do have the coverage often get an unexpected surprise after an on-the-job injury or illness: Insurers generally do not have to provide wage replacement until the worker has lost between three and seven consecutive shifts. And workers at the low end of the wage scale are often discouraged from reporting on-the-job injuries as work-related—which leaves them with no insurance benefits at all.

According to Leigh, insurers cover less than one-fourth of the costs of occupational injuries and illnesses. The rest falls on workers’ families, non-workers’ compensation health insurers and taxpayer-funded programs like Medicaid.

When low-wage workers miss even a few days of pay while recovering from an occupational injury or illness, the effects spread quickly,” says Borkowski.

They will usually have to cut back on their spending right away, which affects the local economy. And families with children might skip meals or cut back on the heat, money-saving tactics that can put vulnerable family members such as children at risk of developmental delays and poor performance in school.

The authors call on policymakers to address this public health problem more forcefully by improving workplace safety and strengthening the safety net to reduce the negative impacts caused by the injuries and illnesses that still occur. Says Monforton:

On average, more than 4,000 workers are injured on the job each day. If we make workplaces safer, we not only stop losing billions of dollars each year, but we also could reduce the pain and suffering and financial impact on thousands of low-wage, hard-working Americans and their families.

The reports are posted here: http://defendingscience.org/low-wage-workers.

This article was originally posted on AFL-CIO NOW on December 14, 2012. Reprinted with Permission.

About the Author: Mike Hall is is a a former West Virginia newspaper reporter, staff writer for the United Mine Workers Journal and managing editor of the Seafarers Log. He came to the AFL- CIO in 1989 and has written for several federation publications, focusing on legislation and politics, especially grassroots mobilization and workplace safety. When his collar was “still blue,” he carried union cards from the Oil, Chemical and Atomic Workers, American Flint Glass Workers and Teamsters for jobs in a chemical plant, a mining equipment manufacturing plant and a warehouse.

Your Rights Job Survival The Issues Features Resources About This Blog