McDonalds sued for debit card pay plan

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http://www.philly.com/philly/business/2 ... yplan.html

McDonald's franchise sued over debit card pay plan

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The Associated Press
Posted: Monday, June 17, 2013, 10:55 AM

WILKES-BARRE, Pa. - A single mother who quit her job at a northeastern Pennsylvania McDonald's franchise is suing the owners after she was given a fee-laden debit card and told to use it to access her future earnings.

The Citizens' Voice ( http://bit.ly/12QuR6T) and the Times Leader of Wilkes-Barre reported ( http://bit.ly/12DELaJ) that a lawyer filed a lawsuit Thursday in Luzerne County on behalf of Natalie Gunshannon and other employees.

The lawyer, Mike Cefalo, says state law entitles employees to choose to be paid by check or cash. Gunshannon says she didn't enroll in the payroll system because she believed the fees would bump her earnings below minimum wage.

It seeks damages against the franchise owners, Albert and Carol Mueller. They say they value their employees and want to provide the best possible work environment.

This is pretty much the premise of the Sliders episode Season's Greedings, and it's sad that it's become a reality.

[mr friendly guy]

Hang on a minute. The debit card is supposed to what, provide the same amount of money as her income, which presumably she can spend but cannot save, and she gets a fee on top. WTF.

[TimothyC]

Hang on a minute. The debit card is supposed to what, provide the same amount of money as her income, which presumably she can spend but cannot save, and she gets a fee on top. WTF.

Rather than get a check or an electronic deposit in the bank account of your choosing, the money is placed into an account of your employer's choosing, and the only way to access said account is via a debit card that is laden with fees. I've seen this before, and unfortunately, for those at the bottom of the employment ladder, it's becoming more and more common (employers of this scale will often not have their own payroll departments and will instead outsource it to another firm and directly depositing the money into a specified account is easier and therefor cheaper than depositing the money into the account that the employee wishes).

[AMT]

I've seen this elsewhere. The original reasoning on items like this over deposit of income is that a lot of low income workers don't have accounts where the money can be direct deposited, and the costs for checks (and fees for cashing checks) are more for the company and employee than a one time debit card. The costs for cashing a payroll check when you don't have an established checking account somewhere can be pretty nasty.

Honestly, I see no issue with using a debit card in lieu of paper checks if the practice was voluntary and the fees and costs were comparable or less than what the employee would spend cashing the check at Wal-Mart or a bank without the account.

The issue of course, that it's easily abusable by an employer, which may be the case here. Honestly, we'd have to see how it compares.

[mr friendly guy]

Hang on a minute. The debit card is supposed to what, provide the same amount of money as her income, which presumably she can spend but cannot save, and she gets a fee on top. WTF.

Rather than get a check or an electronic deposit in the bank account of your choosing, the money is placed into an account of your employer's choosing, and the only way to access said account is via a debit card that is laden with fees. I've seen this before, and unfortunately, for those at the bottom of the employment ladder, it's becoming more and more common (employers of this scale will often not have their own payroll departments and will instead outsource it to another firm and directly depositing the money into a specified account is easier and therefor cheaper than depositing the money into the account that the employee wishes).

Which begs the question, why is it cheaper for the firm being outsourced to do the payroll duties to deposit the money into a third account rather than one of the employee's choosing? Do they some type of deal with the financial institution where they deposit it in?

[Korto]

Could be that for one person, it wouldn't be cheaper, but when you've got hundreds of employees all with accounts in different places, the admin costs mount. It's simpler, quicker, and therefore cheaper to have all the accounts in one place.

There are accounts that don't take direct deposit?

[Zaune]

I've seen this elsewhere. The original reasoning on items like this over deposit of income is that a lot of low income workers don't have accounts where the money can be direct deposited, and the costs for checks (and fees for cashing checks) are more for the company and employee than a one time debit card. The costs for cashing a payroll check when you don't have an established checking account somewhere can be pretty nasty.

How hard is it to open a credit union account or something, though? Okay, they probably expect a fixed address and proof of US citizenship, but then so do most employers.

[Patroklos]

Because as was earlier stated many low income employees don't maintain an account that can be direct deposited to and as paper checks become more archaic it cost the employer money to provide them instead of some form of electronic payment. So they outsource payroll to avoid having to pay a dedicated employee or department and that contractor pays employees in the cheapest way possible. The question here is whether the employee was offered direct deposit and either refused or doesn't have the ability to use it, and if the debit fees are any more probibitive than the check cashing fees would be. My guess is yes and yes.

In the the US military you can't get paid any other way than via direct deposit. This can cause some issues with some recruits, especially non US citizens, who can go months without access to their pay until this can be addressed.

[Raw Shark]

The company that I work with started doing this about two months ago for any credit card transactions that go over my day-to-day company debt, complete with massive user fees, because (as always) it's easier for them and fuck the drivers in the ear. My response was: "Get ready for me to never pay ahead again, you shortsighted bastards."

[Zaune]

Got to echo Korto here. How the actual fuck can there be such a thing as a bank account that can't accept inbound electronic transfers? No electronic payments I can sort of understand in certain circumstances, but I think even the Junior Saver account my mother opened for me when I was nine because Dad made the child support cheque out to me personally in a fit of pique (well, that's her story anyway) could accept a direct deposit, and that was eighteen years ago!

[TimothyC]

Before I explain further - I detest the practice and at a prior job when they asked to do this I told them I'd do direct deposit and that there was no way in heck that their two-bit bank offered better service than my current bank.

Which begs the question, why is it cheaper for the firm being outsourced to do the payroll duties to deposit the money into a third account rather than one of the employee's choosing? Do they some type of deal with the financial institution where they deposit it in?

As Korto said, for one person it likely isn't much cheaper, but for a whole group of people the costs add up.

There are accounts that don't take direct deposit?

Got to echo Korto here. How the actual fuck can there be such a thing as a bank account that can't accept inbound electronic transfers?

Just to be clear, it's not that they don't have accounts that can't take deposits, it's that they don't have bank accounts at all.

[Vendetta]

Got to echo Korto here. How the actual fuck can there be such a thing as a bank account that can't accept inbound electronic transfers? No electronic payments I can sort of understand in certain circumstances, but I think even the Junior Saver account my mother opened for me when I was nine because Dad made the child support cheque out to me personally in a fit of pique (well, that's her story anyway) could accept a direct deposit, and that was eighteen years ago!

America can be amazingly archaic in some ways. I remember people talking about problems with things like rents and bill payment requiring paper cheques to be mailed around the place because there's nothing like PayPoint (which is what most low income people here who can't guarantee money in account for direct debit use, it's a system where you pay through the till at a supermarket or corner shop using whatever means you have, cash, cheque, card, etc. and the money is automatically transferred to the payee, there's no additional costs and the system operates Europe wide).

America might be the richest country on earth, but in some ways they never caught up with the late 20th century, let alone the early 21st.

[AMT]

Could be that for one person, it wouldn't be cheaper, but when you've got hundreds of employees all with accounts in different places, the admin costs mount. It's simpler, quicker, and therefore cheaper to have all the accounts in one place.

There are accounts that don't take direct deposit?

No, but there are people who can't afford an account to put direct deposit in.

How hard is it to open a credit union account or something, though? Okay, they probably expect a fixed address and proof of US citizenship, but then so do most employers.

Depends on your area. In my city the only way you can be put into a local CU is if you're a student of the big University, a family member of same, an employee of same, or something affiliated with it.

Most CUs I've found in my area don't have open door policies.

Got to echo Korto here. How the actual fuck can there be such a thing as a bank account that can't accept inbound electronic transfers? No electronic payments I can sort of understand in certain circumstances, but I think even the Junior Saver account my mother opened for me when I was nine because Dad made the child support cheque out to me personally in a fit of pique (well, that's her story anyway) could accept a direct deposit, and that was eighteen years ago!

Again, it's not that a bank account can or cannot accept electronic transfers, it's that low income employees can't afford to open or maintain one. If you can't afford to put 100+ dollars in, keep a minimum balance in, or are constantly overdrafting, then whether or not the bank accepts direct deposit doesn't matter.

[Vendetta]

No, but there are people who can't afford an account to put direct deposit in.

And your country has no such thing as free bank accounts?

I mean here you can get a current account with no montly charge, no upfront fee, no minimum monthly payin, and minimum starting deposits that go as low as £1 from major international banks like HSBC.

It is, essentially, inconceivable that someone here not have a bank account because they "can't afford" it.

[AMT]

No, but there are people who can't afford an account to put direct deposit in.

And your country has no such thing as free bank accounts?

I mean here you can get a current account with no montly charge, no upfront fee, no minimum monthly payin, and minimum starting deposits that go as low as £1 from major international banks like HSBC.

It is, essentially, inconceivable that someone here not have a bank account because they "can't afford" it.

Most banks in the states require one of a combination of the above, actually, with minimums going from 25 to 100 dollars for deposits. In addition, they may not be able to get the time to go to the bank during regular hours due to work, or may just be ignorant.

Here's an article from last year talking about this very issue

http://business.time.com/2012/11/20/why ... -accounts/

In many parts of the US it's actually not that easy for the poor, especially the working poor, to get or maintain a checking account.

And even if they do most accounts require maintenance fees unless you have a large amount in place, so you're still losing out on cash, like those who don't have a checking account, even if the numbers differ

[Lord Relvenous]

I've been paid like this before through ADP's system. It's a horrendous racket. Not only do they charge ridiculous fees as described above, their service is terrible and seems designed to cause as much hassle as possible to discourage people with issues.

I lost my card at one point. As I only used the account to get paid with (as soon as a check hit, I would transfer all the money into my back account over the phone) I did not realize it was missing until a week or two after I had lost it. I got paid and needed my account number to do the transfer. However, after calling them and confirming my identity 3 different ways, I was told that the CSR could not give me the number over the phone and that I would need to order a new card. Which cost $10. After a few more minutes of prodding on my part to get around that, I gave in and told her to deduct the amount from my account and send me the new card. After processing that payment, her very next sentence was, "Thank you, sir. Would you like that account number now?"

[Rogue 9]

No, but there are people who can't afford an account to put direct deposit in.

And your country has no such thing as free bank accounts?

There are, but they've gotten considerably rarer since the 2008 crash. My own checking account, which had been free and in good standing for years, went to requiring a $500 minimum balance in 2010, with a monthly fee as the penalty for not meeting it. (I maintain that minimum with ease, but there are many people who can't.) Even before the crash, bad credit made free checking unattainable.

[Serafina]

In Germany, any bank (that deals with customers, not just with companies) has to give you an account no matter how bad your credit rating is. That doesn't have to include electronic payment (which is why i don't have any), and obviously you won't be allowed to get the account into the negatives, but at least you can get an account that way and its not even hard.
There's also a special kind of account thats protected from having funds below a certain sum (500€ or such) withdrawn due to any debts, so that people can retain enough money for living no matter what.

I'm not aware of anything like this happening over here, and honestly the first thing i thought of was a scheme to rip off the employers to safe the company money.

[mr friendly guy]

This is a silly question, but since I am so used to the direct deposit in my bank account all throughout my working life, and now have been told a lot of poor Americans don't have bank accounts, how do they cash a cheque then without having a bank? Do they just open an account for that day?

[General Zod]

This is a silly question, but since I am so used to the direct deposit in my bank account all throughout my working life, and now have been told a lot of poor Americans don't have bank accounts, how do they cash a cheque then without having a bank? Do they just open an account for that day?

There's all sorts of places that will cash a payroll check for a small fee. Either they're dedicated to the job or a side service of grocery stores and such.

[Korto]

Yeah, Friendly, you being a rich bugger and all, you wouldn't be aware of it, but if you ever get your chauffeur to drive you through some of the poorer suburbs ( I'm just funnin' ya! ) you'll see lots of of small lender shops, "Instant Loans!" "No Credit Rating Required" "We Buy Gold!", and so on. They'll cash cheques for a fee.
I don't begrudge them their fee in principle, they're taking a risk and anyway they've got to eat too, but from accounts their fees and interest rates are pretty usurious.
It's also a poverty trap. Something happens and you're forced to take out a short-term loan to the next payday for living expenses, then you have to pay it back and re-borrow for the next fortnight's living expenses because you're now short due to the fees on top of whatever happened, and so on.

[Rogue 9]

If you have a paper check, the bank that issued it will typically cash it for free even if you don't have an account there. The real problem is banking hours. I'm by no means in the grip of crushing poverty, and have direct deposit into my checking account, etc, but I work from before the bank opens until after it closes nearly every day, which isn't atypical among blue collar workers and especially service industry workers.

[Col. Crackpot]

In the united states, any bank or credit union is going to pull a credit file both with not only a credit agency but also with an agency like chexsystems or NCPS. While poor credit ratings may be overlooked when opening a checking account, if you have an active charged off checking account with another bank you won't be able to open another until that is settled. Also fraudulent activity is reported and that will get you blackballed as well.

Ditto goes for getting check cashing privlidges as a grocery store.


Edit: this typo edit is sponsored by samsung

[mr friendly guy]

Firstly, thanks for the replies. It certainly given me a better understanding of the situation. However if some banks

a) require a minimum deposit of $25 USD to set up an account, and
b) banking hours are not conduicive to setting up an account as they clash with working hours..

1. How difficult is it to save $25 (or a bit more than that) for the minimum deposit. Presumably there are no fees involved once you have the minimum deposit unless its overdrawn etc. How much is a payday for someone on $15 K a year after tax?

2. Can't someone either get a relative to set up the account (joint account maybe), or set up the account in your holidays? Don't tell me America doesn't give its workers holidays.

[darkjedi521]

Minimum deposit and minimum daily balance are two different things. For the account I have, I only need $50 to open it, but if I drop below $1000 in a month, I get charged $15 for the privilege of having the account. This isn't a bottom tier account, the bottom tier (cheapest) account is either $3/month flat rate or $10/month or $300 minimum balance. Other fees for stuff too on the low level accounts, like a $5/month fee for mailing a paper statement (Online free of charge)