29 Mar 2024
Monday 1 July 2013 - 14:55
Story Code : 36159

Many US workers pay a fee to get paid

Many US workers pay a fee to get paid
[caption id="attachment_36160" align="alignright" width="210"] A former employee has filed a class action suit against a McDonald's franchise in Pennsylvania over payroll options.[/caption]
An increasing number of hourly workers in the United States are required to first pay a fee in order to receive their wages, a report says.
The employers of these mostly hourly workers have started to issue prepaid cards instead of ordinary paper paychecks and direct deposit.In most cases, workers themselves are required to cover the costs, the New York Times reports.

To withdraw their pay, employees can use these payroll cards like a credit card at an A.T.M machine.

But, fees quickly add up; for instance, one provider charges $1.75 to allow a withdrawal from most A.T.Ms, $2.95 for a paper statement and $6 to replace a card.

Even those who do not want to use their cards have to pay $7 inactivity fees.

As a result, some workers end up earning less than the minimum wage when taking into account the charges, according to consumer lawyers, employees and state and federal regulators.

The report cites Devonte Yates, who earns $7.25 an hour working a drive-through station at a McDonalds in Milwaukee, Wisconsin. He said he now spends $40 to $50 per month on fees related to his JPMorgan Chase payroll card.

A majority of workers say they have to use the cards as many companies do not offer common payroll options such as checks or direct deposit.

Among the companies which issue prepaid cards for their employees are Taco Bell, Walgreen and Wal-Mart among other large companies.

The use of payroll cards is gaining momentum at a rapid pace. In 2012 alone, $34 billion was loaded onto 4.6 million active payroll cards, according to the research firm Aite Group.

Even in companies where employees have a choice, they are often automatically enrolled in the payroll card program and have to deal with a pile of paperwork if they want to opt out.

But for banks that seek to compensate for billions of dollars of losses incurred from a spate of recent limits on debit and credit card fees, the payroll cards option can be lucrative, according to banking analysts.

It is estimated that by 2014, $60 billion in wages be paid through payroll cards.

By Press TV

 

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