Charging fees to cash paychecks is illegal in California

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In my last post regarding Wells Fargo and Bank of America charging non-customers $5 to cash their paychecks, I said, "This is one of those things that some banks do that should be illegal...". Well, come to find out, it is. David Lazarus has a follow-up to his previous column, which got the attention of the state's Department of Industrial Relations.

According to Dean Fryer, a spokesman for the Department of Industrial Relations, the charges violate Section 212 of the California Labor Code, which requires that payroll checks "be negotiable and payable in cash, on demand, without discount."

"It is clear that every employer who has allowed a fee to be charged for cashing a paycheck is in violation of the labor code."

It's not clear whether the banks can be forced to comply with state law, as they are somewhat shielded from state regulation by federal law. But even if the banks cannot be forced to comply, the employer can be held liable for the fees.

It should be interesting to see how this plays out.

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TweezerMan expresses a similar experience I had with Wells Fargo in his post here: Wells Fargo to charge customers to get their own money Read More

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This page contains a single entry by TweezerMan published on March 17, 2004 2:37 PM.

Wells Fargo to charge customers to get their own money was the previous entry in this blog.

Check cashing fees gets attention of state Senate Banking Committee is the next entry in this blog.

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