Wal-Mart, Home Depot Among Those Probed on Payroll Cards
The companies, which include Time Warner Cable Inc. (TWC) and Darden Restaurants Inc. (DRI), were asked for information about their use of the cards, including disclosures to employees and fees that workers pay, according to letters obtained by Bloomberg News.
“We are concerned about excessive or insufficiently disclosed fees which may unduly reduce employees’ take-home pay,” New York Attorney General Eric Schneiderman’s office said in the letters to the companies yesterday.
The use of prepaid payroll cards is growing, according to a February 2013 report by research and advisory firm Aite Group, which said $34 billion in gross dollar volume was loaded onto 4.6 million active payroll cards in 2012. The firm projects those figures to rise to $68.9 billion and 10.8 million cards by 2017.
Banks with payroll card programs include Bank of America Corp., JPMorgan Chase & Co. (JPM) and Wells Fargo & Co. (WFC), according to the report. Aite Group calls payroll cards a “sales opportunity” for bank issuers that can generate fee revenue and potentially new consumer-banking customers.
Schneiderman’s probe into the prepaid cards comes as his office investigates possible labor violations by fast-food restaurants in New York, including failure to pay overtime and insufficient reimbursement for work-related expenses.
Home Depot, Costco
In the inquiry into payroll cards, New York is seeking information from the companies to determine whether their practices comply with New York labor law, according to the letters.
Walgreen employees are offered payroll cards as an option and aren’t required to accept wages on the cards, Jim Graham, a spokesman for the Deerfield, Illinois-based company, said in an e-mail.
The company negotiated agreements with ATM providers in its stores to accept Walgreen pay cards without fees for withdrawals, he said. The cards also give employees immediate access to their pay, and those without bank accounts can avoid fees they may otherwise pay to cash checks, Graham said.
Representatives of the other companies either couldn’t be reached for comment on the letters or declined to comment on them.
State law requires that employees must give advance written consent to be paid by payroll cards and any agreement to receive wages by the cards can’t be a condition of employment, the attorney general’s office said.
The office wants a summary report of fees paid by employees or deducted from accounts as a result of payroll cards and documents provided to employees that disclose fees they may be charged. It’s also seeking communications between the companies and their payroll card provider or financial institution concerning the payroll card payment system used.
“Employees must have a method to obtain all of their wages in a timely manner, without incurring fees,” Schneiderman’s office said in the letter.