Are Businesses Using Prepaid Debit Cards to Pay Less than Minimum Wage?

Several businesses have been accused of using prepaid debit cards with hidden fees to pay workers. These cards incur fees when they are used and for monthly maintenance. Fees from using the cards can drop wages to below the federal minimum of $7.25 per hour. In addition, the cards cannot be used everywhere like most debit or credit cards. Using the cards may violate minimum wage laws in California.

The fast-food chain Hardee’s was fined for paying workers less than minimum wage for using prepaid debit cards. After an investigation by the Labor Department, Hardee’s was ordered to pay $2,071 to an undisclosed number of workers. Hardee’s is not the only business accused of using prepaid debit cards with hidden fees. A Dave & Buster’s employee recently filed a lawsuit against the company over its use of prepaid debit cards. According to the woman, fees from using the cards dropped her pay below minimum wage.

Companies are using prepaid debit cards because they save money on administrative fees associated with printing paychecks. In some cases, businesses receive kickbacks for using the cards.

What Are the Minimum Wage Laws in California?

Effective January  1st, 2017, California’s minimum wage is $10.50 per hour for employers with 26 or more employees. For employers with 25 or fewer employees, the minimum wage is $10 per hour. Cities may enact their own minimum wage laws.

Employers cannot pay workers less than the California minimum wage, even in cases where workers agree to be paid less. Workers who are provided with less than the state minimum wage should contact an employment attorney to explore legal options for recovering these wages.

The Los Angeles labor law attorneys at Kesluk, Silverstein, Jacob & Morrison, P.C. can help workers recover backpay.

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