July 2, 2013 -- McDonald's will give workers more payment options after a former employee sued a franchise owner saying she was required to receive her wages through a debit card that charged fees, resulting in some hourly employees receiving less than minimum wage.
Natalie Gunshannon, a single mother, said she and other workers were paid through a JPMorgan Chase Payroll Card, which has a $1.50 fee for ATM withdrawals, a $10 inactivity fee after 90 days, and a 75 cent online payment fee per transaction and other fees.
Gunshannon, who filed a lawsuit in the Luzerne County Court of Common Pleas against the franchise owner last month, is hoping to have her case certified as a class action on behalf of the other employees who were paid with the Payroll card.
Employees of 16 McDonald's restaurants in northeastern Pennsylvania will have the option of getting paid via direct deposit, paper check or payroll card, franchise spokeswoman Christina Mueller-Curran told the Associated Press on Monday.
McDonald's USA said in a statement: "McDonald's franchisees are responsible for, and make their own decisions around, employment and pay related matters.
McDonald's USA is not named in this complaint. As such, we believe it would be inappropriate to further comment or speculate."
Gunshannon's attorney, Michael Cefalo, told ABC News on Tuesday that the lawsuit will continue.
"They're moving in the right direction," Cefalo said. "They're starting to give people the option, which is something they should have done in the past."
Gunshannon said she asked her employer if she could receive her wages through direct deposit at her credit union, which she said did not accept payments through the payroll card. She is suing under the Pennsylvania Wage Payment and Collection Act for unjust enrichment.
Franchisees Albert and Carol Mueller provided a statement to ABC News last month, which read: "We value our employees and everything they do for our organization. We are committed to providing them the best possible work environment so they can deliver the fast, reliable service that our customers expect. We are aware of this matter. But at this time, we have not seen a copy of the complaint. For this reason, it would be inappropriate for us to comment further."
Suzanne Martindale, staff attorney with Consumers Union, said some employers are motivated to pay wages with these payroll cards to cut the cost of distributing paper checks.
"Employers are always looking for ways to cut costs," she said. "There is incentive for employers to offer these cards but in some cases, they don't negotiate with the payroll card provider over fees."
Gunshannon, who studied massage therapy, began working as an hourly employee at a McDonald's in Shavertown, Pa., on April 24 after she was unable to find jobs in her preferred field.
"There are no jobs in Luzerne County," she said.
She was paid about $7.44 an hour and worked 30 to 37 hours as a part-time worker.
Pennsylvania's basic minimum rate is $7.25 an hour.
After she was issued a JP Morgan Chase Payroll card, she requested a paper check from her employer.
A manager allegedly told her, "If you don't activate the card, there is no way for us to pay you," according to the court complaint.
McDonald's managers and assistant managers "have the option to receive wage compensation by way of direct deposit, thus avoiding fees," the complaint states.
"McDonald's does not provide a choice for hourly employees to receive their justly earned wages through a bank check, cash or direct deposit," the lawsuit said.
Gunshannon said the people with whom she worked were "nice" but she quit after three weeks for not receiving her wages as requested. Gunshannon said she is looking for jobs at other restaurants or home health work.
"This isn't something personal. I would just like to be paid for my work," she said.
However, some people say payroll debit cards can be beneficial to the unbanked or underbanked.
"Payroll debit cards offer real benefits for workers who are accustomed to cashing paychecks at check cashers, including meaningful cost savings, greater security and the convenience of an electronic payment option," said Timothy Flacke, executive director of the nonprofit Doorways to Dreams (D2D) Fund, which makes financial products for low- and moderate-income consumers. "Of course, many people do not like to have a product chosen for them, especially when there are fees involved."
A growing number of employers use payroll cards to pay some of their employers, but it violates both state and federal law to pay by payroll card alone, according to Lauren Saunders, managing attorney with the National Consumer Law Center.
"Employees should always have the choice of direct deposit to their own bank account and also the choice of a check or cash," she said. "Depending on the particular card, for unbanked employees, a payroll card can be a safer, faster, more convenient and cheaper way of receiving wages than paying to cash a paper check. But payroll cards vary widely and some charge too many fees. Some payroll cards even have expensive overdraft fees, which are completely inappropriate on payroll cards or any other form of prepaid card."