Nowadays, many employers are not giving employees paper checks. Nowadays, people usually/often get direct deposit although many states mandate that an employer cannot compel employees to accept direct deposit. To cut down on problems and potential thefts, etc, many employers have recently gone to paying employees with debit cards, analogous to the “gift cards” that many of us give and receive for different occasions.

Now, the New York Attorney General has asked for information from Wal-Mart, Home Depot and other employers about this increasingly “popular” employer practice, to ascertain the legality of the practice.  This is because if bank fees or charges are assessed, this would mean employees were not getting their wages in full, free and clear, and this could therefore lead to suits against the employers and the banks.

The letters to the various employers announced that the State “was concerned about excessive or insufficiently disclosed fees which may unduly reduce employees’ take-home pay.”

The fees often arise when employees make more than a fixed number (e.g. three) of transactions at ATMs.  Some banks charge fees for balance inquires or for using banks other than where the card is issued.  The fact that the fees may be a surprise for employees is another problem with them.  Plus, for workers earning minimum wage or nominally above it, the fees can add up to something perhaps significant.

This is the stuff that class actions were made for.  I can already envision a cottage industry of these kinds of lawsuits, akin to the automatic lunch deduction class actions and “blackberry” class actions that have popped up over the last few years.  Employers should check the law of the state(s) they do business in to ascertain if these practices are legal or secure opinion letters from the particular State DOL to determine the legality of such practices.