What if the employer pays its employees with debit cards? Well... is that "lawful money of the United States?" No. Is it a "check?" No. Easy case: employer loses, right? Well, last Friday, the employer lost at the Superior Court in Siciliano v. Mueller (opinion here). That said, the employer mustered some arguments.
First, the employer argued that paying its employees in debit cards was the "functional equivalent" of paying them in money. Oh, really? The Court found this argument . . .
. . . unavailing, particularly because the payroll cards, which were mandatory for hourly employees, forced users to incur fees, including over-the-counter cash withdrawal fees and inactivity fees, unless the employees complied with the requirements of the bank/company issuing and managing the debit cards. For example, the fee schedule indicates the cardholder was limited to one free withdrawal per deposit, and thereafter each withdrawal carried a $5.00 fee.Yeah, that doesn't sound "equivalent" to me.
Next up, the American Payroll Association (which is apparently a thing) brought up a good point that direct deposit is technically neither money nor check. They also noted a statute on point:
For the purposes of any statute, rule or regulation requiring any payment to be made in lawful money or by check, whether for wages, salaries, commissions or other claims of any kind, such payment may be made by credit to an account in a bank, credit union or other financial institution authorized to accept deposits or payments designated by the recipient of such payment if the recipient has requested such method of payment in writing.7 P.S. § 6121 (emphasis added). Well, it was looking pretty good until that last sentence. Here, the employer allegedly required the employees to receive their wages by debit card. Sorry, that's not gonna cut it.
Employers cannot require employees to accept wages via debit cards, particularly debit cards that include fees and penalties.
Of possible interest: I blogged about this at the trial court too.