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Payment Of Wages By Payroll Debit Card Violates Wage Payment And Collection Law

On October 21, 2016, the Pennsylvania Superior Court upheld a lower court decision finding a violation of the Pennsylvania Wage Payment and Collection Law (“WPCL”) where a company paid its employees through the mandatory use of a payroll debit card. In Siciliano v. Mueller, 2016 Pa. Super. 229 (Pa. Super. 2016), the employer, owner of several McDonalds franchises, paid all employees by a JP Morgan Chase payroll card. Users were subject to fees in certain circumstances, including fees for more than one withdrawal per deposit.

The WPCL requires that wages be paid in “lawful money of the United States or check.” 43 P.S. § 206.3. The court stated that a debit card is neither lawful money nor a check. The court rejected the employer’s argument that the debit card was the functional equivalent of a check or lawful money. It pointed to evidence that employees could incur fees, including cash withdrawal fees and inactivity fees. It noted that the fee schedule limited cardholders to one free withdrawal per deposit, with a $5.00 per withdrawal fee thereafter.

The employer had also argued that the provision of the Banking Code that allows for direct deposits also allowed for the use of debit cards. The court pointed to the fact that the law allows for such transactions “if the recipient has requested such method of payment in writing.” 7 P.S. § 6121. Since the use of the debit card was mandatory for employees, the court held that Section 6121 did not apply. The court stated: “The use of a voluntary payroll debit card may be an appropriate method of wage payment. However, until our General Assembly provides otherwise, the plain language of the WPCL makes clear that the mandatory use of payroll debit cards at issue here, which may subject the user to fees, is not.”

What Does This Mean For You? Using debit cards for payment of wages is risky. As the Siciliano case held, unless the Pennsylvania Supreme Court holds otherwise or until legislation is passed allowing it, mandatory use of debit cards for wage payments will be found unlawful under the WPCL. Voluntary use may still be problematic, particularly if the debit card has fees attached to it.

If you have any questions about this or any other employment or labor law issue, please contact Whitney Rahman at (717) 509-7237 orswr@blakingerthomas.com.

**This update is provided for informational purposes only and
should not be construed as legal advice or as creating an
attorney-client relationship where one does not already exist**