Debit Cards: A Threat to Your Small Business

With more men and women joining the workforce without checking accounts, many employers in the Johnson City, Tennessee area have found the need to start paying their employees with debit cards. However, this method of payment poses a couple of issues for employers. Here are some things you need to be aware of before you begin to pay your employees with debit cards.

The Problems

One thing to keep in mind is that you cannot require your employees to have a checking account or to receive their paycheck in the form of a debit card. You also have to disclose the fees associated with the account, the account history, and their rights. 

The most common issue of these two is the latter – the fees associated with using debit cards. If fees on their card cause their hourly wage to drop below minimum wage, you are in violation of the Fair Labor Standards Act (FSLA). This can also come into play when you withhold funds from their paycheck for failure to return company equipment, their uniform, their cell phone, etc. The FSLA requires that all employees be paid at least minimum wage. So be careful! Make sure you do not drop the total amount of their pay check divided by hours worked below the current minimum wage.

Contact Us

If you have any questions about this or any of your business insurance needs, contact our Tri-Cities, Tennessee insurance office today at (423) 292-4142. You can also email us at We will be glad to answer any questions you have and help you make sure you have the insurance coverage you need.

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