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N.Y. attorney general probes payroll cards over fees

By Karen Freifeld

New York (Reuters) - New York is investigating some of the country's largest companies over their use of cards to pay hourly employees, a person familiar with the matter said on Wednesday.

New York Attorney General Eric Schneiderman sent letters on Tuesday to more than 20 companies asking for information on their use of the payroll cards, the person said.

The companies include Walgreen Co. , Home Depot Inc. , Wal-Mart Stores Inc. and Darden Restaurants Inc. , which owns Red Lobster and Olive Garden, according to copies of the letters obtained by Reuters.

The probe by Schneiderman comes after complaints from workers and advocacy groups about fees associated with the cards, said the source, who was not authorized to speak publicly about the matter. It was first reported by the New York Times.

The cards, which have grown in popularity in lieu of paper paychecks and direct deposit, can carry a host of fees, such as 50 cents or $1 for a balance inquiry and $1.50 for an ATM withdrawal.

They may appeal to low-wage workers who do not have bank accounts.

In the letters, the New York attorney general's office asks for documents and communications regarding each company's use of payroll cards over the past year, the number of employees in New York who use them and fees paid as a result of the cards.

Terri Gerstein, chief of the attorney general's labor bureau, who wrote the letters, requested the information by July 22.

Wal-Mart, the world's largest retailer and the largest private employer in the United States, said it would respond to the attorney general's office.

Wal-Mart employees choose whether they want their wages on the card, said Wal-Mart spokesman Randy Hargrove. The majority of employees pick direct deposit, he said.

Wal-Mart has offered the card since 2009, Hargrove said. Employees have free, unlimited withdrawals at Wal-Mart stores and Sam's Club warehouses and can also get one free ATM withdrawal per pay period, he said.

Home Depot said it does not offer pay cards to its employees in New York.

A Darden spokesman said each employee is set up with access to a pay card, but can receive their pay by check or direct deposit instead. The spokesman said the card is a way for employees to gain access to pay without incurring check-cashing fees and carries no fees of its own at certain outlets.

Walgreen did not immediately return a call for comment.

Payroll card issues came into the public eye last month after a Pennsylvania woman sued a McDonald's franchisee over its use of them.

Natalie Gunshannon said she was required to get her wages through a JP Morgan Chase Payroll card that carried fees, including $1.50 for each ATM withdrawal and $1.00 for each balance inquiry, according to the lawsuit.

The McDonald's franchisee could not immediately be reached for comment. McDonald's Corp. , the parent company, said in a statement that it offers electronic payment options in the form of pay cards or direct deposit to its employees.

McDonald's franchisees determine how they pay their own employees, the world's biggest fast-food chain said.

The lawsuit, which seeks class action status, is Natalie Gunshannon v. Albert and Carol Mueller T-A McDonalds, 7010 of 2013, Court of Common Pleas, Luzerne County, Pennsylvania.

(Additional reporting by Jessica Wohl, Lisa Baertlein and Chandi Doulatramani; Editing by Edwina Gibbs, Andre Grenon and Dan Grebler)

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