In Pennsylvania, Paychecks Continue to Rule Following Superior Court Decision Prohibiting Mandatory Use of Debit Cards

Pennsylvania employers are now prohibited from exclusively using debit cards to pay employee wages. In a case of first impression, the Pennsylvania Superior Court ruled that doing so violates Pennsylvania's Wage Payment and Collection Law ("WPCL"), which mandates that workers be paid in "lawful money of the United States or check."

In Siciliano v. Mueller, a unanimous three judge panel held that mandatory payroll debit cards subject users to fees, including activation and withdrawal fees that are inconsistent with the mandates of the WPCL. The case challenged the payroll practices of Albert and Carol Mueller, owners and operators of 16 Pennsylvania McDonald's franchises. Current and former employees brought a class action lawsuit alleging that they were required to accept wage payment in the form of JP Morgan Chase payroll cards for a three year period in violation of the WPCL.

While the decision clarifies that employers cannot unilaterally require the use of debit cards, the decision suggests that employees may still voluntarily elect to receive wages via debit cards. The Pennsylvania General Assembly is considering a bill to amend the WPCL to specifically include the voluntary use of debit cards as an appropriate form of payment. Several other states, including New Jersey, Michigan, and Illinois, also require that employees consent in writing before wages can be paid by debit card.

The Superior Court decision means that Pennsylvania employers who elect to pay employees using debit cards should obtain voluntary signed consents from employees before using debit cards and should continue to offer traditional wage payment options such as payment by check. Additionally, Pennsylvania employers must be aware that under the WPCL, they cannot require the direct deposit of wages without written employee consent.

If you have any questions about WPCL compliance, please contact Erin Galbally at (215) 640-8510 or egalbally@clarkhill.com, or another member of Clark Hill's Labor and Employment Practice Group.