In a rebuke to employers who prefer to issue prepaid debit cards instead of paychecks, the Consumer Financial Protection Bureau (CFPB) issued a letter to employers engaged in this practice that their companies, by law, cannot force employees to be paid in such a way. The CFPB warned that they intend to use legal enforcement against violators. Employers are required to offer other forms of wage pay, including paychecks and direct deposit.
These prepaid debit cards often have fees for normal usage, including withdrawing cash and even checking the balance. Many employees who received such high-fee payroll cards are low-wage earners and can ill-afford debit card fees, effectively reducing their pay. Many of the violating companies are retail stores and fast food companies and pay all of their employees with these fee-laden debit cards.
The letter issued by the CFPB also serves as a reminder that employees who choose to be paid with a debit card are given specific protections, including information regarding fees and access to account information.
If you or a loved one has been the victim of deceitful employer practices that may violate employment law, contact The Law Offices of Larry H. Parker today for a free consultation. You may be entitled to compensation.
