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ATM-like pay cards for hourly employees scrutinized by senators

It is becoming increasingly rare to see an individual in America paying for a major purchase with either cash or a check. Our society has increasingly embraced the card-carrying model of paying for goods and services. We use credit cards, debit cards and electronic gift cards to pay for everything from groceries and gas to online movie tickets. Credit and debit cards are easy to use and easy to carry. However, simply because our society has moved in the direction of paying for goods and services with plastic does not mean that it is a good idea to pay workers for their time and effort with a plastic, ATM-style card.

Sixteen senators have become so concerned with the wage and hour violation potential of paying workers via ATM-style cards that they have asked two prominent regulators to "take swift action to protect American workers." Both the acting secretary of the U.S. Labor Department and the director of the Consumer Financial Protection Bureau have been charged with examining the ways in which these cards are currently impacting workers' rights and the ways in which they could potentially.

When workers are issued ATM-style cards instead of paychecks or direct deposit, they often become immediately subject to significant fees that they would otherwise be able to avoid. When a worker has a paycheck deposited into a bank account, all he or she has to do to access money or seek a balance inquiry is ask a teller or look at an online account for free. Workers given ATM-style cards incur fees for withdrawing money at out-of-network ATMs and seeking balance inquiries. For low-wage workers in particular, these fees can be debilitating.

Part of what makes this area of law so concerning is that even the senators seeking action on the issue are unsure of just what guarantees the law grants employees when it comes to receiving their paychecks and accessing their income in fair and unburdened ways. As a result, these concerned lawmakers are asking federal regulators to clarify what existing law grants workers in terms of rights related to this issue. Once the law has been clarified, the senators and regulators alike can work to protect workers from unfair fees and limited access to the income they have worked hard to earn.

Source: New York Times, "16 Senators Seek Inquiry of A.T.M.-Style Pay Cards," Jessica Silver-Greenberg, July 11, 2013

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