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Thinking of Paying your Employees with a Payroll Debit Card? Think again.

By Eric J. Schreiner

Can an employer require its Pennsylvania employees to receive their wages by way of a payroll debit card? The Pennsylvania Superior Court recently answered this question finding that such a requirement violated the Pennsylvania Wage Payment and Collection Law (“WPCL”).

In Sicilano v. Mueller, the court held that mandatory payment of wages through a payroll debit card violated that WPCL’s requirement that “wages shall be paid in lawful money of the United States or check.”  The case involved a class action against an employer — McDonald’s franchisees — who had paid their hourly employees through a mandatory payroll debit card rather than by cash or check.  The court found that a payroll debit card was neither lawful money or a check.  The court also rejected the argument made by the employer that a payroll debit card was the “functional equivalent” of lawful money or a check, noting that the debit card forced employees to incur certain fees if they did not comply with the requirements of the company issuing the card. Ultimately, the court ruled that the WPCL did not permit this method of payment where it was mandatory.

The court left open the question of whether this method of payment may be acceptable where it was voluntary, observing that the “use of a voluntary payroll debit card may be an appropriate method of wage payment,” but was clear that the mandatory use of payroll debit cards that subjected employees to fees was not permitted under the WPCL.

This recent decision provides clear guidance for employers that under Pennsylvania law they cannot require their employees to accept payroll debit cards as a form of payment for wages. If you would like more information on this issue, please contact Eric J. Schreiner at (215) 496-7217 or eschreiner@kleinbard.com.