Issues with Instant Pay Apps

January 28th, 2020

Recently, more companies have been offering employees early access to their earned wages through instant pay apps, making it easier for lower salary workers to make ends meet. However, while instant pay apps are beneficial for employees who live paycheck to paycheck, they also present complications for employers regarding wage and hour law compliance.

Instant pay apps allow employees to access wages they earned ahead of their normally scheduled pay date; instead of waiting the typical two weeks to receive a paycheck. Instant pay apps have been lauded as an alternative to traditional payday loans, which charge hefty interest rates. Rather than advancing future wages, the app allows employees to access wages they already earned for a flat fee per transaction.

Pennsylvania Wage and Hour Laws

Under Pennsylvania labor laws, employers must pay hourly employees at least twice during the calendar month by way of cash, check, or direct deposit on regular paydays established by the employer in advance. The first payment must be made between the first and the fifteenth day of the month and the second payment must be made between the fifteenth and the last day of the month. There is an exception for certain types of workers in executive or supervisory positions; they may be paid once a month according to a regularly established schedule.

The minimum wage in Pennsylvania is $7.25 per hour. Most employees must be paid overtime for any hours worked over 40 in a workweek. The rate of overtime pay is one and a half times the employee’s normal rate of pay and overtime wages are payable in the next pay period. Some workers are exempt from overtime compensation, including executives, administrative professionals, and farm workers.

Instant Pay App Complications

Before offering instant pay apps to their employees, Pennsylvania employers should consider the legal issues that come with them. Pennsylvania law requires that any deductions from an employee’s paycheck made by the employer should be for the benefit of the employee. Employers may deduct wages for employees’ convenience but only with their authorization; it is important for employers to gather all necessary authorizations before deducting transaction fees from the employee’s earned wages.

Additionally, employers must comply with federal laws, such as the Truth in Lending Act, the Electronic Transfer Act, and the Anti-Money Laundering and Bank Secrecy Act, as well as state laws governing the sharing of personal information about employees with third parties. Employees should contact a local attorney to ensure that their rights are protected and that they are receiving the full amount of pay to which they are entitled.

Philadelphia Wage and Hour Lawyers at Sidney L. Gold & Associates, P.C. Protect Employees’ Rights to Fair Wage Payments

If you have questions regarding instant pay apps or you have a dispute over wages, contact a Philadelphia wage and hour lawyer at Sidney L. Gold & Associates, P.C. From our offices in Philadelphia and Pennsauken, New Jersey, we represent clients throughout Pennsylvania and New Jersey, including Wilkes-Barre, Scranton, northeast Philadelphia, Bucks County, Chester County, Delaware County, Montgomery County, and Cherry Hill, New Jersey. Contact us online or call us at 215-569-1999 for a free consultation.

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