Appeal In McDonald’s Payroll Card Ruling Falls Flat

An appeals court has upheld a lower court’s ruling that found the owners of 16 McDonald’s restaurant locations in Pennsylvania in violation of state law through their use of payroll cards for employee compensation.

Reports this week said an appeal of that ruling fell flat on Friday (Oct. 21) when the three-judge panel of the Pennsylvania Superior Court agreed with an earlier ruling that a debit card is not considered “lawful money” or a “check” under state law. The defendants, the owners of the McDonald’s locations, argued that the state’s Wage Payment and Collection Law defined payroll cards as the “functional equivalent” of lawful money or a check.

The lawsuit was filed against McDonald’s franchise owners Albert and Carol Mueller, a case that was then granted class-action certification last year by Luzerne County Judge Thomas Burke, Jr. Plaintiffs argued that their employers violated state wage laws because they were required to be paid via payroll cards, which allegedly included hidden and excessive fees.

“The use of a voluntary payroll debit card may be an appropriate method of wage payment,” said the Superior Court, but “mandatory use of payroll debit cards at issue here, which may subject the user to fees, is not.”

The court added that state lawmakers are in the midst of drafting legislation that would regulate payroll cards used by Pennsylvania employers.

Since the case first began, other defendants have joined, including payroll card issuers, like JPMorgan Chase. Earlier this year, those defendants tried to have the case tossed and denied that they were deceptive in their practices using payroll cards as a way to pay employees.

Other states have been examining their own wage and worker compensation legislation in light of payroll cards. New York state introduced new laws to protect workers against fees and other burdens often associated with payroll cards, while Connecticut is also preparing for new legislation to legalize payroll cards so long as they avoid excessive fees.