HR Management & Compliance

Employer Can’t Charge Fee For Cashing Paycheck At ‘Dispensing Machine’

New York’s highest court has ruled that Labor Ready,
Inc., which supplies daily workers for manual labor assignments, illegally charged
workers a $1 transaction fee for cashing paychecks at company “dispensing
machines.” Labor Ready paid employees each workday, giving employees the option
of receiving a payroll check or a “cash voucher.” While the checks could be
cashed at any bank, including one bank without a fee, the cash vouchers had to
be redeemed at a Labor Ready cash dispensing machine, which deducted a
transaction fee from the wages due. The court ruled that the deduction violated
a New York law prohibiting employers from making wage deductions except if
authorized by law or in writing by the employee, where the deduction is for the
employee’s benefit (such as for insurance).


Although the case arose
in New York, California has similar prohibitions on
paycheck deductions. What’s more, California Labor Code Section 212 requires
that if wages are paid by check, order, draft, note, memorandum, etc., the
instrument must be payable in cash, on demand, without discount (reduction), at
some established place of business in the state, such as a bank.


400+ pages of state-specific, easy-read reference materials at your fingertips—fully updated! Check out the Guide to Employment Law for California Employers and get up to speed on everything you need to know.