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Employers Switching From Payroll Checks To Prepaid Cards With Fees
An anonymous reader writes "The New York Times reports a growing number of American workers are being paid by prepaid payroll card. The cards often have fees attached to basic services like making a cash withdrawal or for inactivity. Some employees report that the employers pay by card by default, with paperwork barriers to opting out, and some report that their employers refuse to pay them by check or direct deposit. The issuing banks pitch the cards to employers as a cost-cutting payroll alternative, and sometimes even offer a financial reward for each employee they sign up."
The NYTimes talks about the fees that come along with the use of a preloaded debit card, but in some states (e.g. California), there is a legal requirement that the employee be able to get their pay without any fees, etc. , and at a location convenient to them. No paycheck drawn on a bank in some other state with only 3 branches in that state, etc.
Mind you, that doesn't mean that employers actually follow the rules, or that the employees, who typically are spending all their time just staying alive, will pursue this with the Dept of Labor Standards Enforcement, but at least it is the law.
Tell me again how it is the employee's responsibility to defray the employer's payroll processing costs?
Those who would give up essential liberty to purchase a little temporary safety, deserve neither liberty nor safety.
This frustrated me this year. I received a pre-pair card from the State of Oklahoma for my OK Tax Return. I swear I filled out the direct deposit info, but perhaps I didn't (I could check my copies...). What upset me is the fees for funds withdrawals/etc. This is my money, the state and its corporate partner shouldn't be making money off me when I try to get it.
The card did allow a single withdrawal without a fee at an ATM. I couldn't find an ATM it would work in. Finally logged in to the associated website and transferred to my banking account, with a $0.75 fee. What a crock!
Here's the Oklahoma website pdf detailing the info: http://www.tax.ok.gov/it2011/RefundCard.pdf
and their FAQ: http://www.tax.ok.gov/faq/faqDEBITCARD001.html
I should have mentioned -- I'm also paid via direct deposit. If my 'default' pay were via one of these crappy cards, I'd do *whatever* paperwork was needed to get a normal check or direct deposit...
bork bork bork!
McDonald's is being sued for allegedly paying less than minimum wage using this method.
Some people die at 25 and aren't buried until 75. -Benjamin Franklin
This one makes the point well.
http://consumerist.com/2013/06/17/ex-mcdonalds-employee-sues-because-she-doesnt-want-her-paycheck-on-a-prepaid-debit-card/
This has nothing to do with unions. It's all about the corruption of banks and the force that they can impose through government laws that they help write (which is why more laws is exactly the problem). Take Wal-Mart for example. The problem is not that Wal-Mart doesn't have unions, it's that Wal-Mart relies on it's employees taking advantage of government welfare programs. If those programs didn't exist, people wouldn't even work at Wal-Mart because it wouldn't pay the bills, and when you don't have employees it's awfully hard to have a business.
So that's step 1, if Wal-Mart was forced to pay actual market wages, you'd see a huge shift in the flow of money through retail. Couple that with all the laws that prevent small banks from flourishing and you have a scenario where people are literally forced, by government violence, into slave labor wages using a system that only exists because government masters have ordained the banks as rulers of the universe (with laws written by said bankers).
The problem isn't unions (or lack thereof)...it all boils down to government being the problem, as usual.
The system of prepaid cards with fees is not the perfect solution for poor workers. But it is better than the old system of paying them with checks. Free checking is not available in most banks.
Then why not fix that problem? You also enable poor people to pay bills electronically, buy things online, etc.
British banks have to* offer a "basic bank account", which has no fees (as normal in the UK) but doesn't allow any borrowing, and so doesn't require a credit check. If you have a valid identity document, and don't have "multiple convictions for fraud", you can get one: http://www.moneysavingexpert.com/banking/basic-bank-accounts
It's not that well publicised. For a while, I lived with some Eastern European immigrants in a cheap flatshare in London. They were keeping cash under the bed, but they all were able to open a basic account.
*As is often the case in the UK, instead of a law or regulation the industry is doing something on the understanding that if they didn't, there'd be a regulation, and it'd be worse for them.
I guess this is what you get when you believe unions are evil...
But they are! Unions have done nothing but raise costs and cause distress for all those poor whittle employers. Just think how much more work could be done without all the lazy people demanding "living wages" (they should be working 2 or 3 jobs instead of expecting decent pay!), 2 days off, working only 40 hours/week (and then if they work more many of these same fuckers expect time and a half!). And don't get me started on all the increased expenses just to make sure employees are safe at work. What country are we living in? The Soviet fucking Union!!! Even that name has that evil "union" word in it!
But more seriously, it is quite amusing since you know the same people who bash unions would throw a shit fit if they lost their weekends, 40 hour weeks, and other benefits that the average worker now takes for granted that took unions decades to get us.
Yes unions are so great that in many states and in many professions you are forced to join one. I have no problem with voluntary unions, but unions can be just as oppressive as employers.
Yes it's an anecdote! Were you expecting original research in a Slashdot comment?
1) You can, indeed, get free checking from Credit Unions pretty easy. Some banks too. There really are places that'll do business with you for no money up front and they won't charge you fees so long as you don't do things like overdraw.
2) They say companies are trying to do this instead of direct deposit. DD costs companies next to nothing. The Automated Clearing House (which is how they all do it) charges $0.35/transaction. This is why companies like to pay people that way. It adds just a trivial cost, and it all automated, the money comes out of their account in to yours. Well the only reason to go prepaid cards instead would be because the bank is bribing them, not because it is cheaper because the ACH cost is just fucking trivial.
This is not a matter of being nice to poor employees, this is a matter of fucking people over.
I could certainly understand offering it as an option. Maybe some employees would find it convenient or financially advantageous. But trying to force people on it? That is just trying to screw them over for a very minor benefit. Like I said, ACH is $0.35/transaction (or 0.06% of a minimum wage paycheck, not counting payroll tax and all that jazz if you want to look at it that way) and it is good bookkeeping wise since the transaction hits right away so you know the status of your current accounts.
I've mostly seen it used by companies that insist on direct deposit, with employees that refuse to have a bank account for whatever reason. Mostly labor workers, not skilled workers.
and my union negotiated away double time overtime in favour of time and a half in exchange for union dues being deducted from the lump sum signing bonus...
But, you know, your stories are good too.
I worked at one time where I was paid with one of those cards.
We were paid weekly because we were peon min wage packers.
It was free to transfer to a bank account. There were no fees if we kept a balance - I moved my money out of the card as soon as the company deposited money into it because I didn't trust them.
Anyway, I don't have the fee schedule in front of me to make further comments about the particular card I have.
But the point is, peon min wage jobs pay weekly.
That was a shitty job. You had to show up over an hour before you could even clock in with the hopes of getting selected to work that day. If you got selected, you were able to go to the head of the line the next day. If you had to take a day off, you lost your spot and back in line.
If you weren't selected, you just spent you morning -5AM - 6AM waiting around for no pay. A lot of folks got discouraged and never cam e back after a couple of days waiting around and not working.
The body shop that brought the workers in was ALWAYS recruiting more and turning away more in the mornings - it was retarded.
They would train people on a machine, and the operator would work for a month or two, and then when business dropped they would not call anyone into work.
There were many times as a machine operator where if you still needed to work, they would demote you and you were back to min wage loading machines or packing games.
And when business was slow, no work at all.
And then after work, you had to stand in line for about a half hour - UNPAID - in order for security to search you to make sure you're not trying to smuggle out a video game.
So, you would spend at least 90 minutes a day at the plant unpaid.
Don't like it, you don't have to work there.
And the treatment by the company! It was clear that you were crap. Nothing. That you could be replaced at ANY time - and it was true. There are so many desperate people WANTING to work - contrary to what the conservative pundits say -that they can replace you at ANY time.
The poor are treated like garbage in this country. They are treated as subhuman. And when you're constantly treated that way you start to wonder if it's true.
We, the US, are a class based society - with very little mobility. And if you fall off your rung on the ladder, good luck getting back up it's nearly impossible. Just try saying in an interview - if you actually get one - "when I was out of development work, I worked a min wage job 11 hours a day."
And the industry still expects you to keep your skills up having to live that way.
Quite true! Once you find yourself in ChexSystems (I think that's what they're called), you're blacklisted from all traditional banks.
But then, hardly anybody takes checks anymore, and those that do often process them electronically on the spot, eliminating much of the "benefit" of checks for poor people (namely, "floating" checks a few days before you get paid when you don't have the balance to cover it.)
I was young and poor once. Juggling checks so I could get by without bouncing any is an art all its own, and a much harder one to accomplish nowadays.
Check out my world simulator thingy.
Well, yeah, if you like to skew your history to suit your political bias, that's the story.
There's plenty examples of cycles like that in history. What really happens is that there's an inequality (employers vs employees), the employees band together to address the inequality (unions), then the inequality slowly slips the other way (union corruption), forces gather to displace the unions, and the cycle starts again. It's an alternation between two inequalities, with only a brief period of equilibrium. Portraying either the employers or the unions as pure of heart is equally disingenuous.
Just because you're paranoid doesn't mean there isn't an invisible demon about to eat your face
I switched to a credit union in 2010 after I got fucked over by S & T Bank. My credit union charged me $10.00 for membership.
If you're in a bad financial situation, it can be hard to come up with a spare $10.00 but isn't that better than getting charged $4.00 EVERY TIME you want to access your money?
Yes, being poor sucks. But at some point, you have to start making decisions with an eye towards the long term.
LK
"Hi. This is my friend, Jack Shit, and you don't know him." - Lord Kano
When I'm in the car and want some cheap, fast, gut-filling goodness, do I say to my wife "Do you want to stop at McDonald's?"
Or do I say "Would you like to stop at that individually-franchised restaurant-like business that happens to have a McDonald's sign attached to it?"
Just sayin'.
Kid-proof tablet..
I live in a country free from unions.
Last month our boss did not pay out R&D salaries. "Project is late, nobody gets paid until you deliver." From experience we know
that the first one to file a suit is fired, possibly with false accusations of sexual misconduct at work. Seen it happen.
Too bad I am dependent on the company to stay in the country, if I quit I am thrown out within five days, with nowhere to go. So
I am hoping I get my June and July salary in August (because the project is still not on par with management expectations).
That is what you get without unions. Someone who can gather everyone at the company and say: "nobody works until you pay".
And these cards don't help change that scenario either.
The cesspool just got a check and balance.
I remember when they started this....I thought it was a great thing to see checks clear instantly. Then i realized, banks still kept their "hold" on the money. So it was the worst of both words, the check writer has no float time, AND the person cashing it still has to wait that whole float time. Basically, the banks stole the float time for themselves.
"I opened my eyes, and everything went dark again"
1, if they've written bad checks, the bank simply won't give them an account. 2, when your money is in the bank, it can be easily taken without your consent - various kinds of debt, credit agencies, lawyers, even the feds. Cash money in hand (or hidden wherever), much harder for third parties to access, hence, you can live easier when in trouble. 3, banks keep shitty hours: when you need your money in the evening and you can't get it, that can be a problem when the issue at hand is diapers, etc. 4, even when "free", make an error (common with low income types), and the bank will hose you with a huge fee (or fees... they can be pretty tricky about things like the order they cash/bounce when you overdraw. 5, location can be an issue if you're not mobile. There's probably more than this too; these were just off the top of my head.
I've fallen off your lawn, and I can't get up.
With all due respect sir, you don't know what my life and upbringing were like.
I've been luckier than many. Perhaps in some ways, I've been luckier than most. However, I have faced more than my fair share of hardship.
These are not perpetual infants that we're talking about. These are people who are presumably adults and are responsible for their own decisions, rational or not.
At some point, we become responsible for ourselves.
LK
"Hi. This is my friend, Jack Shit, and you don't know him." - Lord Kano
But they are! Unions have done nothing but raise costs and cause distress for all those poor whittle employers. Just think how much more work could be done without all the lazy people demanding "living wages" (they should be working 2 or 3 jobs instead of expecting decent pay!), 2 days off, working only 40 hours/week (and then if they work more many of these same fuckers expect time and a half!). And don't get me started on all the increased expenses just to make sure employees are safe at work. What country are we living in? The Soviet fucking Union!!! Even that name has that evil "union" word in it!
But more seriously, it is quite amusing since you know the same people who bash unions would throw a shit fit if they lost their weekends, 40 hour weeks, and other benefits that the average worker now takes for granted that took unions decades to get us.
The problem that unions face is one of bad PR. When unions are going toe to toe with corporate giants, everyone cheers for the union, but many union rules pit the union and its membership directly against the supervisors and lower management. There then becomes the perception that the union protects the lazy workers against the poor hard-working supervisor (or other union members) who have to pick up the slack. That automatically creates an entire legion of people who are right at the beginning of their careers. Many of those young supervisors and mangers will eventually find their way into positions of policy making, and they wont forget how hard they had to work because the union protected people it had no business protecting. The end result is a large swath of the population willing to testify that unions are bad.
Unions need to get much more picky about their rules. Seniority shouldn't count for nearly as much as it does. It should get you preference on vacations, and more time off than those with lower seniority, but the pay discrepancy is far too large. The unions should also figure out how to reward their hard working members at the expense of their lazier members. This will induce their members to *want* to work hard, and everyone wins. The union gets a better reputation with the world at large, the hard working members get unions protection and the best wages they can get. The lazy members get compensated less if they choose to remain lazy, and the company gets a more reliable work ethic. Most importantly, you reduce the animosity between lower management and the workers, which is critical to keeping an anti-union sentiment from growing in the population at large. Such a union would have tremendous bargaining power at the negotiating table, as they would bring an elite workforce to bear, and present a much less complicated job of managing and supervising.
I wish I had a good sig, but all the good ones are copyrighted
About low-income people and bank accounts --- in many cases, they don't have one because they don't want to accumulate more than $2000. In many states, that's the asset limit for Medicaid. So if you go over that limit, you have to pay all your medical bills. So people get into the habit of living hand-to-mouth and never save any money.
In 2014, the asset limit for Medicaid disappears! So theoretically, people will be able to open bank accounts and start saving up money. But after all these years of not saving, I don't expect any sudden shift to people being smart about money.
Everything is more expensive when you're poor. Not just a saying, entirely true. Can rarely purchase when stuff is on sale, get late fees on everything, interest to pay, higher interest and fees because you pay interest and fees. It's like saying, because you have little money, we're going to charge you more!
Was poor once.. it sucked. You get sick more often, meaning you get more bills and miss more work because you can't afford good food. I have been clawing my way out of the hole for many years now. Almost 50% of my gross income goes to paying debts, which are mostly medical, school, car, and credit debts from not having enough money to eat so I used my credit card to not starve.
I've learned to not judge people, they tend to be victims of their own circumstances.
But more seriously, it is quite amusing since you know the same people who bash unions would throw a shit fit if they lost their weekends, 40 hour weeks, and other benefits that the average worker now takes for granted that took unions decades to get us.
I don't think any sensible person would argue that many of the things unions accomplished in years past have been unambiguously good. Furthermore a union can be an important counterweight to management excesses. My father was a union member for many years and it probably kept him employed in the face of some pretty inept management. Unions even can help make companies more productive in some cases. Conceptually I'm actually a supporter of unions.
The problem is that many unions have ceased trying to fight for what is reasonable. They aren't fighting anymore for a reasonable work week or improved safety or to get benefits in most cases. They often seem to care little about the health and competitiveness of the company. They make the (false) argument that their own actions and demands somehow cannot have a detrimental effect on the company and that the only goal of management is to screw the union members. Once things become reasonable the unions seem unwilling to drop their adversarial position. I have NEVER seen a union go to management and say, "hey, I see that our retirement costs have become a big burden that is hurting the company. How can we help?" No, instead they simply fight tooth and nail for more even when more isn't really possible. Unions quite simply haven't realized that they've won and keep fighting to the long term detriment of everyone.
If companies tried to change the 40 hour work week then unions likely would enjoy a surge in popularity because then they would be fighting a worthy cause for reasonable working conditions. When work conditions and pay are already are reasonable, unions need to recognize that they need to serve a much more limited purpose. Should management start behaving unreasonably then a union has every right and obligation to take measures to protect the union membership.
The first thing you need to get into your head is: The "Free Market" is a myth. Like a frictionless bearing it is useful only in an elementary theory. You don't get to choose if you have to pay rent and feed children and there are no other employers near you.
and the banks have fun with the float time. If they see a check come through for a high amount that can drain the account, it will go through fast. Instead of one bounced check, that big one magically finds its way to the front of the line so that all the little checks that had not cleared yet have insufficient balance.
Here's another one:
If you're low-income, you could live in low-income housing. Which, for reasons related to abuse of the system (think about Steve Jobs' $1 salary and apply that to someone with absolutely zero shame), is not based on your actual income (cash flow), but is instead based on your net worth including savings. But it has the effect of making low-income housing dwellers either A) not save anything and never improve their lot in life, or B) save, but keep it under the mattress because keeping it in a bank makes it traceable and will get you kicked out of your home.
I have a friend that lives in low-income housing, and he fits into scenario B. He makes probably $15k/year and definitely needs the low-income assistance. His savings is a wad of cash, locked up in a box in his closet. If he put it in a bank, he wouldn't qualify to have his apartment. But his savings isn't near enough to live anywhere else and his income is still low. He'd be homeless.
Personal Anecdote FTFail!
Here are a few things you can "blame" on Unions:
Now, please regale up with more tales of flight and fancy and how the unions are to blame!
Yeah, right.