Not if there are fees associated with it. Connecticut law requires employers to pay their employees “…in cash, by negotiable checks or, upon an employee’s written request, by credit to such employee’s account in any bank which has agreed with the employer to accept such wage deposits.” Although Connecticut law does not expressly include payroll debit cards as a permissible method of paying wages, the Connecticut Department of Labor takes the position that an employer can pay an employee with a payroll debit card as long as:
(i) the employee gets a pay stub or has access to a pay stub regarding the wages being paid with the payroll debit card; and
(ii) the payroll debit card does not impose any fees or charges on the employee, such as fees to withdraw the funds or verify the balance on the card.
Connecticut employers who pay employees on a debit card with fees are violating the law. Moreover, as illustrated by a recent Pennsylvania case, such employers expose themselves to serious financial liability to the extent that they may face potential class action lawsuits.
In that case, a McDonalds’ employee in Pennsylvania sued on her own behalf and on behalf of similarly situated employees because they were being paid on debit cards full of fees. “According to the lawsuit, the J.P. Morgan Chase payroll card carries fees for numerous transactions. They include a $1.50 minimum charge for an ATM withdrawal, $5 for an over-the-counter cash withdrawal, $1 to check the balance, 75 cents per online bill payment and $15 to replace a lost or stolen card.”