A new way for Wisconsin employees to be paid is viewed by some as a tactic by banks to collect more money from consumers.
State agencies recently announced that employees can elect to receive payment on a prepaid card through a program called Accelapay offered by U.S. Bank. Previously they could receive a paper check or have money directly deposited into a bank account.And this is only the beginning.
A June 30 article in the New York Times reported employers such as McDonald’s, Walgreens and Wal-Mart are increasingly using the cards to cut costs, while in some cases forcing employees to pay fees to use the cards. In Pennsylvania, a McDonald’s employee filed a lawsuit claiming the fees reduced her pay below minimum wage.
Reuters reported in November 2011 that banks would begin pushing such prepaid cards because of Dodd-Frank regulations passed in 2010 that capped the fees they can charge on debit card transactions. The prepaid cards aren’t covered by those rules.
Wisconsin’s card comes with some fees, such as 50 cents for a balance inquiry at a participating ATM and $2 for withdrawals at a non-participating ATM. There are no fees for purchases, receiving cash back from contracted merchants or inactivity.
I warned the gentle reader about this prepaid payroll card a couple months ago, along with this tidbit:
Many employees say they have no choice but to use the cards: some companies no longer offer common payroll options like ordinary checks or direct deposit.Marty Beil better get off his ass and start a suit about this before all his workers find their pay cut again so that US Bank can get their cut of the deal.
At companies where there is a choice, it is often more in theory than in practice, according to interviews with employees, state regulators and consumer advocates. Employees say they are often automatically enrolled in the payroll card programs and confronted with a pile of paperwork if they want to opt out.
“We hear virtually every week from employees who never knew there were other options, and employers certainly don’t disabuse workers of that idea,” said Deyanira Del Rio, an associate director of the Neighborhood Economic Development Advocacy Project, which works with community groups in New York.