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Record #: R2013-690   
Type: Resolution Status: Failed to Pass
Intro date: 7/24/2013 Current Controlling Legislative Body: Committee on Finance
Final action: 5/20/2015
Title: Call for hearing(s) on use of payroll cards by Chicago employers
Sponsors: Burke, Edward M., Burns, William D.
Topic: COMMITTEE/PUBLIC HEARINGS - Committee on Finance
Attachments: 1. R2013-690.pdf
Related files: R2015-407
Committee on Finance

WHEREAS, on July 2, 2013, several publications reported that the New York Attorney General had commenced an inquiry into the use of payroll cards to pay New York employees; and

WHEREAS, the reported investigation follows the filing of a putative class action by a former McDonald's franchise employee against the franchise and its owners in Pennsylvania state court for violating the Pennsylvania Wage Payment and Collection Act (WPCA); and

WHEREAS, the lawsuit alleges that the franchise refused to pay wage compensation, as provided by law, when it paid workers their wages via a JP Morgan Chase Payroll Card, which required the payment of fees in order to access their wages, and without the option of being paid in cash or by bank check; and

WHEREAS, according to a report in the New York Times, in the overwhelming majority of cases, using a payroll card involves a fee: one provider, for example, charges $1.75 to make a withdrawal from most A.T.M.'s, $2.95 for a paper statement, and $6 to replace a card; and

WHEREAS, according to the report, some users even have to pay $7 in inactivity fees for not using their cards; and

WHEREAS, the Federal Reserve has banned inactivity fees for credit and debit cards, but no protections exist on payroll cards; and

WHEREAS, paying wages to employees using payroll cards is an increasingly attractive option for many employers seeking to ease the administrative burdens related to check payments; and

WHEREAS, some companies reportedly no longer offer common payroll options such as ordinary checks or direct deposit; and

WHEREAS, according to consumer advocates, at companies where there is a choice, it is often more in theory than in practice since employees are often automatically enrolled in the payroll card programs and confronted with a pile of confusing paperwork if they choose to opt out; and

WHEREAS, payroll cards are particularly popular with retailers and restaurants and are gaining momentum; a...

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