WILKES-BARRE – A recent Pennsylvania Superior Court ruling
related to the practice of paying employees with debit cards by 16 McDonald’s franchisees
in the Commonwealth could mean a payday of more than $1 million for thousands
of current and former employees at those restaurants.
A class of more than 2,300 employees allege that the mandatory debit card use violates the provisions of the Pennsylvania
Wage Payment and Collection Law (WPCL).
In order to get to their pay through the debit cards,
employees must activate the cards. In addition, according to the lawsuit, the
employees had to go to specific banks to avoid withdrawal fees.
Jill S. Welch, a partner in Barley Snyder LLP’s Labor and
Employment Practice Group, said she was not surprised by the Superior Court’s
ruling in favor of the employees.
“When it comes to employees’ wages, Pennsylvania’s laws and
regulations are protective of workers, and the ruling is consistent with this,”
Welch told the Pennsylvania Record.
Welch said wage garnishments and payroll deductions are more
limited in Pennsylvania than in other states, and direct deposit, even without
the possibility of fees and charges, requires employee consent and an opt-out
Under the WPCL, employers must pay their workers via check
or some other form of “lawful money of the United States.” In its ruling, the
Superior Court said a payroll debit card does not fall into either category.
The court also took issue with the fact that the use of the
debit cards was mandatory, and that employees of the McDonald’s franchises in
question were offered no alternate payment methods.
“The use of a voluntary payroll debit card may be an
appropriate method of wage payment,” the ruling said. “However, until our
General Assembly provides otherwise, the plain language of the WPCL makes clear
that the mandatory use of payroll debit cards at issue here, which may subject
the user to fees, is not.”
Welch said the court looked at how the Legislature and the
Department of Labor and Industry have implemented rules surrounding direct
deposit for guidance on whether the use of mandatory payroll cards, including
the possibility of fees being incurred if employees don’t use specific bank branches,
would violate the WPCL.
The court noted that employers cannot mandate the use of
direct deposit without an employee’s consent and without a process under which
the employee can opt out of direct deposit and be paid by check, Welch said.
“Without any specific guidance on this new technology, the court
left it to the legislature in the first instance to address whether and under
what conditions payroll cards can be used as an acceptable method to pay an
employee’s wages,” Welch said.
According to Welch, the Superior Court ruling could be
appealed to the Pennsylvania Supreme Court, “which is apparently being
considered by the McDonald’s franchises.”
“The case has been certified as a class with 2,380
employees, which makes the case ready for trial,” Welch said.
If the Superior Court’s decision is upheld in connection
with the legality of the mandatory use of payroll cards, Welch said the
remaining issues for trial would be whether this group of employees was paid by
mandatory payroll cards, as well as the amount of damages.
Damages available under the WPCL include lost wages and
costs incurred, penalties, liquidated damages “equal to 25 percent of the total
amount of wages due, or $500, whichever is greater,” and reasonable attorneys'
fees for a three-year period.
Welch said the trial court noted that if the plaintiffs
prevail, that each class member would likely receive more than $500 in damages,
meaning the total award could be more than $1.2 million.