Employers have a few different options when choosing how to pay their workers. Although paychecks are the most common payment method, employees can also be paid in discounts, gift cards, and debit cards. Employers just need to be sure that, whatever method is used, the workers are properly compensated for all the time they spend working.
According to a recent wage and hour lawsuit against Kmart, the retail chain allegedly had a policy of using debit cards to pay its employees. Donte W., who recently filed the wage and hour lawsuit, alleges this practice held back earned wages from employees, floated money, and split fees with Citibank, the bank that provided the debit cards.
The class action lawsuit alleges this pay practice denied employees earned wages because they were charged 50 cents for every transaction. It also alleges their debit cards allegedly had a limit on how much could be withdrawn from the card at one time. This practice allegedly denied employees access to their full wages and required them to pay more of their wages in fees to Citibank in order to access all their funds. The lawsuit alleges that, over a period of four years, Kmart employees were forced to pay “hundreds of thousands if not millions” of dollars to Citibank in transaction fees.
The wage and hour class action lawsuit further alleges the debit card payment practice was used to “float” investments, meaning Kmart and/or Citibank earned interest on employees’ wages during the holding periods. Not only is this unfair to the workers, it constitutes an unfair business practice because Kmart illegally profited from its employees’ wages.
The federal Fair Labor Standards Act (FLSA) regulates employment law to make sure employers don’t take improper advantage of their workers. One of the ways it accomplishes this is by defining overtime as any time spent working after eight hours a day or forty hours a week and requiring employers to pay all hourly workers one and one-half times their normal hourly rate for all overtime worked.
The FLSA also requires employers to cover all business expenses, including travel costs when necessary. In the event an employee has to pay for a business expense, the company must reimburse the employee the full amount of the business cost.
Additionally, the FLSA requires employers to provide their workers with pay stubs that accurately reflect all time worked and wages earned within each pay period.
According to the recent wage and hour lawsuit, Kmart allegedly failed to include overtime wages on workers’ pay stubs. The retail chain also allegedly failed to properly reimburse employees for all travel expenses related to their temporary reassignment to other Kmart locations.
The wage and hour lawsuit is seeking class certification for all current and former employees who worked at Kmart and were paid by debit card any time in the past four years. The lawsuit is seeking injunctive relief, restitution, disgorgement of profits by Kmart, and punitive damages against Kmart for unfair business practices, failure to comply with the Private Attorneys General Act, and other violations of California labor law.
The Chicago overtime lawyers at the Chicago Overtime Law Center are investigating unpaid overtime claims against large retail chains such as Petsmart, Officemax, Staples, Smart & Final, Apple, Walgreen’s, CVS, Urban Outfitters, GAP, Abercrombie & Fitch, Limited, Forever 21, Macy’s, Target, JC Penney’s, Lowes, Marshalls, TJ Max, Victoria’s Secret, Nieman Marcus, Saks Fifth Avenue, Best Buy, Home Depot, Apple, Best Buy, Sears, K Mart, J.C Penney, Walmart, Costco, PetSmart, REI and other retail chains for misclassifying employees as managers, erasing or altering time sheets or time records, pressuring workers not to report or record overtime, failing to pay for time spent on security checks, and otherwise failing to pay workers for overtime and other wages. If you are the victim this practice call us at one of our offices near Evanston and Joliet at (312) 869-4095 or contact us online.