The restaurant chain Dave & Buster’s is making headlines again…and unfortunately, not for good reason. In March, a lawsuit filed against them regarding employee rights under ERISA moved forward in the court of law. Now, an employee in Oregon filed a lawsuit against the company over its payroll practices.

The gist

The suit accuses the restaurant of forcing employees to be paid through a payroll card for their first and last month’s paychecks. It also alleges those payroll cards forced unfair fees on employees when they went to withdraw the funds.

Apparently, this means that Dave & Buster’s failed to pay their employees at or above the federally required minimum wage and overtime rates.

So, what is a payroll card?

To put simply, a payroll card is a type of bank debit card. It’s a way for employees to receive and use their payroll wages. Once pay is deposited into a payroll card account, employees can use this card the same way they use a debit card.

Users can withdraw earnings from an ATM or cash-back purchases. Typically, payroll cards are used by hourly workers without a checking account.

New York law

Governor Andrew Cuomo announced last week that New York will require payroll card companies to provide employees with access to at least one local ATM that doesn’t have fees and is near their home or work.

Additionally, account maintenance, overdraft and inactivity fees are being removed. Employers will no longer receive financial benefits for paying their workers through a payroll card.

Around 200,000 workers in New York are paid with payroll cards. These workers were hit with withdrawal fees or charges for viewing account balances. Gov. Cuomo stated that in many cases, the employees using these don’t have a bank account and are required to pay ATM fees to withdraw money, in addition to initial card fees.

These new standards come after a report issued back in 2013 from Attorney General Schniderman’s office. The report stated that about 75 percent of workers paid via payroll card were being charged a fee to access money and were not properly informed of how they could avoid being charged.

Other requirements per the new regulation include:

Employers must provide workers with either a wage statement or a paystub for each pay cycle

Employers must maintain up-to-date records of employees’ length of employment, rates of pay, itemized deductions and any credits claimed by the employer.

How you can avoid legal implications when using a payroll card

Reach out to us! If you have employees who might need to use a payroll card, we’ve got you covered. PrimePay’s Paycard has many beneficial features and our team will be able to answer any questions you may have. 

Disclaimer: Please note that this is not all inclusive. Our guidance is designed only to give general information on the issues actually covered. It is not intended to be a comprehensive summary of all laws which may be applicable to your situation, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion. Consult your own legal advisor regarding specific application of the information to your own plan.