This is not a story about a worker's timesheet or being denied overtime hours. It's about how a worker got paid. A Pennsylvania woman who worked for one month at a local McDonald's is suing because her paycheck could only be accessed using a debit card with onerous fees, instead of a paper paycheck or electronic direct deposit. This new alternative form of payment may sound sensible considering the ubiquitousness of debit cards.

On the surface, this case may seem trivial. But if you are payroll manager or human resources director you should read on.

First, it likely could turn into a class action law suit with hundreds or maybe thousands of workers suing MacDonalds franchises, banks and other firms using these cards to distribute paychecks. On the other hand, if these actions fail, fee-based debit cards could become common practice amongst many or all McDonald's franchises, and other firms, and employees paid this way will be on the lookout for shaved wages, and payroll and human resource managers should be ready for all that comes from more disgruntled employees.

The lawsuit filed on behalf of Natalie Gunshannon, a 27-year-old single mother, said a J.P. Morgan Chase payroll card was given to her and listed a number of usage fees. For example, each cash withdrawal at a retail counter (not an ATM) costs five dollars. (Most debit cards associated with major banks don't require payments of five dollars for the cash back option at retailers such as grocery stores.) For this Chase card, an ATM withdrawal costs $1.50, according to the suit. On a percentage basis, this fee is non-trivial. For a $20 withdrawal, the fee is equal to a 7.5%. 3.75% for $40 and so on. The fee for checking the card's balance is one dollar. Fifteen is the cost for replacing a lost or stolen card.

Natalie said she did not sign the debit card, nor has she used it. In fact, she did not sign up for the program, nor did she enroll in the direct deposit payroll program because she believed that both were going to have excessive fees that would reduce her pay.

We can all look at this case from the plaintiff's standpoint (reasonable concern over losing  a portion of her earnings), or the defendant's side (a good business measure to cut the costs of distributing paychecks). But what the franchises payroll department failed to do was look at Pennsylvania state law which requires that pay be distributed by cash or check (or direct deposit in lieu of a check). 

Fairness and business aside, there is the law. Depending on state labor laws, it may not be legal to use these cards at all, or without offering alternatives to employees. Or it might be illegal in all fifty states. According to FindLaw, using only payroll debit cards to pay employees is a violation of both state and federal law.

ABC News quoted Lauren Saunders, an attorney with the National Consumer Law Center, '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.'

This particular case in Pennsylvania is generating a significant amount of press, and undoubtedly raising some awareness on the part of contract employees who are being paid in the same manner that the plaintiff was.

So what's the upshot? Payroll Managers who are using these cards to pay employees might do well to carefully investigate their respective state's laws to avoid future litigation. If you are considering such a program, you should probably take a short pause and consult your legal counsel on what forms of payment are legal in your state. You could avoid a lot of heartache, unhappy employees and lawsuits.