McDonald's franchise to employees: Want fees with that?

Does the word “cheap” apply universally to McDonald’s? No. Does it attach here? Clearly. Photo: various sources

WASHINGTON, June 24, 2013 – This past April and May, owners of a McDonald’s franchise in Pennsylvania paid employees by depositing their pay into a debit card account at Chase Bank.  Employees were then given a debit card and written instructions on how to use the card. The fees for using the card were also provided.

Notwithstanding that working at McDonald’s for many is an entry level, barely above minimum wage job, it is hugely disrespectful when those lowly wages are reduced by bank fees because the employer will not simply provide a paycheck.


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Natalie Gunshannon, 27, worked for Albert and Carol Mueller, owners of a McDonald’s franchise in Shavertown, Pennsylvania, from April 24th to May 15th this year, and she quit because the Muellers refused to pay her in any method except the debit card.

Natalie did not enroll in the payroll system offered. She said “the fees would be exorbitant and actually drop my earnings below minimum wage.”

Natalie earned $7.44 per hour. Minimum wage is $7.25. She did not want to enroll in the Mueller’s payroll system. Fees involved were $1.50 per ATM withdrawal, $5.00 for over-the-counter cash withdrawals, $1.00 for balance inquiries, 75 cents for online bill payments and $15.00 for lost or stolen card replacement. A charge of $10.00 per month is assessed if the card is not used for more than three months.

The pertinent Pennsylvania law states as follows:


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wages shall be paid in lawful money of the United States or check, except that deductions provided by law, or as authorized by regulation of the Department of Labor and Industry for the convenience of the employee, may be made including deductions of contributions to employee benefit plans which are subject to the Employee Retirement Income Security
Act of 1974, 29 U.S.C. §1001 et seq.

The definition of  “lawful money” is: 

Any form of currency issued by the United States Treasury and not the Federal Reserve System, including gold and silver coins, Treasury notes, and Treasury bonds.

Pennsylvania law allows debit card payment to employees, if they get the employee’s permission.

Natalie hired an attorney and a class action lawsuit has been filed. Mike Cefalo filed the lawsuit Luzerne County, Pennsylvania last week, and noted: 

“We are getting more and more people calling us who are in the same situation. They say the debit card is a drain on the pay they earn. They say these fees are something they don’t want to pay…

It’s tough on the street today to get a job. When you get a job and earn money, you want to spend every cent the way you want to spend it…”

The lawsuit alleges that employees had no option to receive a traditional paycheck or to get paid by direct deposit. The lawsuit alleges that this no option practice violates the Pennsylvania Wage Payment and Collection Act.

McDonald’s is not a defendant in this lawsuit.

A spokeswoman for McDonald’s, Ofelia Casellas, provided a statement to a local Pennsylvania newspaper, “The Times Tribune”:

“Franchisees are independent, local businessmen and women who make their own decisions around employment matters. McDonald’s requires all franchisees to operate their businesses in accordance with all local, state and federal laws.”

Ray Kroc was in California in 1954 and visited a McDonald’s hamburger stand. He saw they were running eight milkshake mixers at once. He was impressed by how quickly customers were served and he saw an opportunity to sell many more milkshake machines. Kroc became the business partner of brothers Dick and Mac McDonald, and they opened the first McDonald’s in Des Plaines, Illinois in 1955. McDonald’s and the Golden Arches have since become an internationally famous symbol of quick-service hamburgers, fries, chicken, breakfast items, salads and milkshakes.

McDonald’s, similar to any big, successful business, has had problems and bad publicity over the years. The single biggest McDonald’s gaff came in 1994 when Stella Liebeck sued them over scalding coffee that caused third-degree burns on her inner thighs when the coffee she ordered at a drive through spilled in her lap. McDonald’s, despite having internal reports urging them to decrease the temperature of the coffee, and despite over 700 prior scalding burn victims, including their own employees, refused to lower the coffee temperature.  

A McDonald’s spokesman at the time said that 700 burn victims was an insufficient number to cause the company to evaluate its practices.

The misreported facts of the Liebeck case (which became known as the McDonald’s Hot Coffee case) made the case a rallying point for so-called “tort-reformers” and the phrase “frivolous lawsuits” became popular.

Does the word “cheap” apply universally to McDonald’s? No. Does it attach to the Muellers here? Clearly.

The Muellers own at least 15 McDonald’s franchises in northeastern Pennsylvania. According to entrepreneur.com, the cost of a franchise is anywhere from $1 million to $2.1 million.  A minimum cash requirement of $300,000.00 is needed, up front, for most franchises. 

A refusal to provide a simple paycheck to an employee is beyond unbelievable. There simply is no rationale that can justify such behavior. Cheap. Beyond cheap.

Disgusting.

Cheap in the Liebeck case cost McDonald’s. Cheap will now cost the Muellers.

Paul A. Samakow is an attorney licensed in Maryland and Virginia, and has been practicing since 1980.  He represents injury victims and routinely battles insurance companies and big businesses that will not accept full responsibility for the harms and losses they cause. He can be reached at any time by calling 1-866-SAMAKOW (1-866-726-2569), via email, or through his website. He is also available to speak to your group on numerous legal topics.  Paul is the featured legal analyst on the Washington Times Radio, in Washington, D.C., on the Andy Parks show, the featured legal analyst for America’s Radio News Network, heard in 165 markets nationwide, and he is a columnist on the Washington Times Communities.

His book The 8 Critical Things Your Auto Accident Attorney Won’t Tell You is free to Maryland and Virginia residents and can be obtained by ordering it on his website; others can obtain it on Amazon

 


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Paul Samakow

Attorney Paul Samakow brings his legal expertise to the headlines from life and real-life experience to The Washington Times Communties. A native Washingtonian, Samakow has been a Plaintiff’s trial lawyer since 1980, with offices in Maryland and Virginia. 

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