Wednesday, June 17, 2015

Pennsylvania Judge Holds that "Payroll Cards" Violate Wage Payment and Collection Law

The Pennsylvania Wage Payment and Collection Law (WPCL) requires employers to pay employees "in lawful money of the United States or check." s 260.3. A class action lawsuit in Luzerne County claims that some McDonald's franchise owners are violating the WPCL by mandating that employees accept payment of their wages with JP Morgan-issued "Payroll Cards."

The employer argued that the cards were the functional equivalent of money or checks because they could be converted to cash at a bank or ATM. Luzerne County Judge Burke issued this opinion (HT: Law360) to the contrary. The Court concluded that the payroll debit cards were neither lawful money nor checks. Therefore, the employer was violating the WPCL by requiring employees to accept them as payment of wages.

This is a matter of first impression, and an appellate court may very well view the issue differently. The opinion expressly called for the views of the Pennsylvania Department of Labor and Industry (DLI), and also noted that pending legislation would include debit cards in the WPCL as an acceptable form of payment. However, for now, the only precedent (that I know of) in Pennsylvania is this decision holding that paying wages with debit cards violates the WPCL - so Pennsylvania employers use them at great risk.