Legal trouble for Dave & Buster’s payroll card

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An employee of Dave & Buster’s restaurant chain filed lawsuit against company’s payroll card system during first week of September 2016 in Oregon. The lawsuit accuses payroll practices of Dave & Buster which includes forcing employees to be paid through payroll card for first and last month salary and unfair charges for cash withdrawals. Payroll policy of the company also failed to meet federal requirement of minimum wage and overtime rates to employees. As part of lawsuit, claims are to reform payroll policy and bearing of lawyer and other expenses at employee end instead of a financial compensation.

There has been rising concerns of payroll card usage across United States for some time now. Previously McDonalds and JPMorgan Chase faced similar charges in 2015. A former employee of McDonald's sued the company for forcing to take wages through payroll card. Later on the case became a class action lawsuit which involved more than 2000 employees. Darden Restaurants also faced similar charges of switching to payroll cards for saving costs which resulted in employees paying fees for accessing their own wages. A fee is charged for balance enquiry and workers cannot withdraw entire pay amount on payment day. There is violation of minimum wage structure as well.

According to published sources, 7.6 million employees were paid through payroll cards in 2015 which went up to 8.9 million in 2016. These cards are similar to conventional debit cards, only difference is that they can be loaded by the employer. It is profitable for employers as it cuts down cost of generating and distributing paychecks. Darden Restaurants saved USD 5 million annually through payroll card system. This system helps in paying workers without bank accounts and they save USD 3 for cashing a check along with facility to withdraw funds and paying at retailer joints. However, this advantage has been overpowered by the fee structure in other arenas.

Despite of issues related to payroll cards, it usage is expected to reach 12.5 million by 2019. However, there might be strict regulations on the usage and fee structure. New York Department of Law has already implemented regulation on usage of payroll cards in the state and has dismissed charges associated with its usage. Bills have been passed across 19 other states in order to protect workers against unwanted payroll card charges for its usage. It can be anticipated that despite increased adoption of payroll cards, major reforms will be introduced regarding charges associated with them in coming years.

To know more and gain deeper understanding of prepaid card industry in the United States, click here