Senate Dems want oversight of payroll cards

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Employers sometimes use the cards to distribute pay as an alternative to giving their workers checks or putting money in their accounts via direct deposit. The cards can be considered easier for people without bank accounts.

The payroll cards can carry fees, though, for services like using an ATM, checking one’s balance or for inactivity, which the senators worry violate consumer protection regulations and take advantage of people. Those fees can add up to some workers effectively getting paid less than the minimum wage, and employers can receive commissions for getting employees to use the cards, according to a New York Times report. 

The senators want the agencies to focus their attention on whether or not workers understand the fee structure of the cards and whether they violate existing laws.

Additionally, the lawmakers worry that employers may be taking advantage of their workers to get them to use the cards instead of other payment methods.

“Perhaps even more worrying than the fees associated with these cards is the possibility that employees might be coerced or inappropriately pressured into using them in the first place,” they wrote.

They added, “Our view is that mandating the use of a particular payroll card, with no available alternative, seems clearly to violate federal law.”

The Department of Labor should consider issuing new rules to make employees aware of their different payment options, the senators wrote.

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