Use of payroll cards under spotlight in New York

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Posted: Friday, July 5, 2013 12:00 am

NEW YORK (AP) — The New York Attorney General’s Office is looking at a little more than 20 businesses for their use of ATM-type cards to pay some of their workers.

The office of Attorney General Eric Schneiderman said it sent letters to companies including Wendy’s Co., Costco Wholesale Corp., Dollar Tree Inc., Chipotle Mexican Grill Inc., Home Depot Inc. and Walmart Stores Inc.

The letters request documents, including fee schedules, related to the payroll card systems used by each business. The attorney general wants to ensure the companies comply with laws aimed at protecting workers from fees for using the cards.

The issue came to national attention after employees of a McDonald’s franchise in Pennsylvania sued over being forced to take their pay on such cards.

Many employers are trying to save on the expense of issuing paper checks by turning to direct deposit or payroll debit cards. Payroll cards can be beneficial for people without bank accounts. But opponents say cards with high fees mean that some workers are essentially making less than minimum wage.

Nearly 4 million U.S. households, or 3.2 percent, have someone receiving wages on a payroll card, according to a 2011 survey by the Federal Deposit Insurance Corp.

Walmart Stores spokesman Randy Hargrove said that New York state labor officials expressed no concerns when they were told full details of the program when Walmart launched it in 2009.

Hargrove also said Walmart offers workers the option of pay card, direct deposit or being paid by check.

© 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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