Minimum Wage – BakerLLP

More employers are turning to debit cards in lieu of paychecks to provide their employees with wages. However, an employer must make sure they meet all the requirements of the California labor code before they start this practice, or they may be liable for unpaid wages.

There are many reasons why an employer would want to use debit cards rather than checks. First, debit cards do not require the employer to print out checks and distribute them. Debit cards give the employer the freedom to basically use direct deposit with all employees, regardless of whether or not the employee uses a bank account.

The Drawbacks of Debit Card Payments

However, employers often do not consider the hardships that employees face when using debit cards. First, some debit cards may require employees to pay fees on ATM withdrawals, or to find their balance. The cards also may automatically deduct payment during periods of inactivity.

Employers must always give their employees the option to be paid by direct deposit or debit card. This also means that the employer cannot require the employee to agree to be paid by a debit card as condition of employment. However, besides these requirements, there is not a lot of guidance as to what would entail a violation of this law. Although the California Department of Industrial Relations Division of Labor Standards Enforcement provided an official opinion on the legality of debit cards several years ago, not many courts have analyzed the issue.

Know Your Paycheck Rights

Employers may not pay employees with credits that can be used to purchase merchandise. The employer also may not receive any part of the employee’s wage paid; this means that kickback schemes between financial institutions cannot provide the employer with a portion of the fees they collect. The full amount of the funds must also be available for at least 30 days after being issued. Further, the employer must provide a full wage statement that complies with Labor Code § 226(a).

An employer might also run into trouble if the fees imposed on an employee for the use of a debit card effectively reduces the employee’s wages to less than the minimum wage.

Wage and hour law is very complex. If you suspect that your employer has not properly paid you, take advantage of your free consultation with employment law attorney Michelle Baker. Call us at (858) 452-0093 to speak with an attorney today.

California and Federal law requires employees to be paid for work performed, in the amount of at least the minimum wage, as well as any applicable overtime. Unfortunately, many employees are not paid at the rates they should be. Many believe that when employers do this, it is tantamount to stealing their workers wages because the employees have rightfully earned them, making the wages the property of the employee. By keeping this property it is no different than taking the money right out of their wallet.

The California Labor Commissioner in particular is fond of using the expression wage theft. In a recent case the commissioner filed a mechanic’s lien to recover more than $240,000 in unpaid wages from 31 construction workers at a Holiday Inn Express in Eureka California. The construction contractors were not properly licensed contractors, and had been purposefully misclassified as independent contractors in order to avoid properly paying them for every hour worked and to avoid paying overtime.

This action was taken as a part of the Labor Enforcement Task Force (LETF), an agency formed by members of the Labor Commissioner and Cal-OSHA offices to tackle labor and employment law violations in the underground economy. The complaint against the employer was first filed to the LETF by the local Carpenters Union.

The investigation also uncovered significant workplace safety violations, including unsafe scaffolding, ladders, and training, which totaled up to $27,000 alone in workplace safety citations on top of the $247,681 in unpaid wages. One reason the amount of unpaid wages was so high for workers on this single project is because the workers were paid with checks that bounced, and the employer also violated meal and rest break requirements.

The mechanic’s lien placed on the property will be used to ensure that the workers will be paid for all the time they are owed, and that the fines and assessments for the violations of the labor code are also paid off.

This case shows the problems of working in the underground economy. Business who try to operate under the radar of regulatory agencies often do so in order to cheat their workers and avoid paying income taxes. If your employer has committed wage theft against you, contact the experienced California employment attorneys of Baker Law Group, LLP today. Call (858) 452-0093 to schedule a free consultation.

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