October 17, 2017

October 16, 2017

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Pennsylvania Short Circuits Mandatory Payroll Debit Card

Like most states, Pennsylvania has a Wage Payment and Collection Law. This law requires employers, on regular pay days designated in advance, to pay wages owed either by lawful money of the United States or by check. The Act defines the term check as a “draft.” While the terms “draft” and “lawful money” are not defined, the common definition of these terms accepted by the courts respectively is an unconditional written order signed by one person directing another to be paid, and officially coined or stamped currency. Obviously, in 1961 when the Act was written, the legislature did not contemplate today’s e-economy or the use of payroll debit cards.

Unhappy employees of a McDonald’s franchise brought suit against their restaurant and its owners when they were required to accept their weekly wages on a payroll debit card. In Siciliano, et al, v. Albert/Carol Mueller, t/a McDonalds, et al., applying Pennsylvania’s Wage Payment Collection Law to this new economy currency, the Superior Court of Pennsylvania found that requiring the acceptance of wages on a payroll debit card violated this Act. In so holding, the Court noted that a payroll debit card literally fit neither the definition of check or lawful money of the United States. The Court distinguished the payment of wages by direct deposit by noting that Pennsylvania’s Banking Code was amended to permit payments required to be made in lawful money or by check to include credits to a recipient’s bank account. The Court also distinguished debit cards from direct deposits by noting that the latter was only permissible if authorized in writing by the employee. The use of debit cards in this matter, however, was not authorized by employees. Their use, moreover, subjected employees involuntarily to various bank user fees; thus, lowering the employees’ take home pay, which would not happen with direct deposits, a check, or cash. The Court did note that the consensual use of payroll debit cards may not run afoul of the Pennsylvania Statute.

Unless Pennsylvania employers wish to digest an unhappy meal of both compensatory and punitive damages and litigation costs, topped off with a night cap of both their own and their employees’ attorneys’ fees, they will continue to have the stagecoach bring their employees’ pay by check or cash.

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About this Author

Martin Saunders, Attorney, Labor, Employment, Steptoe & Johnson Law Firm
Of Counsel

Martin Saunders focuses his practice in the area of labor and employment law and related litigation.

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