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  • Employees charged "payroll processing fee" (Ohio) Ohio

    Several non-profit employers in the same city utilize the same payroll processing service. Many or most of the employees of these organizations are members of a local union based in the same town. The rest are members of other locals of the same international union as the local union of the first group. For various reasons, none of the latter are under any obligation (via any of the applicable union security clauses) to join the local that is signatory to the CBA. However, they do pay a small percentage of their pay, "work dues," to the local per a requirement in the bylaws of the international union.

    The employees who are not members of the local union where the work is based are charged $25 per check as (according to the pay stub line item) a "payroll process fee."

    How is it that, without the employers or employees requesting such a deduction, the payroll service is imposing a $25 charge on each of the affected employees? It's very simple. The payroll service is run by the local union itself.

    The local's rationale, according to employees who called the union to complain, is that its members pay for the service with their dues (no mention by them of the work dues paid by local non-members). They also state that the charge is meant to be an incentive to join the local.

    And, of course, the employers are already paying a processing fee to the payroll service.

    Has anyone ever heard of such a thing? Can you see any way this can be justified legally? I don't know all the intricacies of Ohio employment law, but, whatever else it allows, I don't think it can override the relevant parts of the Fair Labor Standards Act. I've read the FLSA (and labor law) backward and forward, but find nothing there that would ever allow this. It looks to me to be a violation of that statute for sure (wages must be paid "free and clear").

    It might be a creative stretch, but I also could see a possible, though unusual, violation of the NLRA by the employer, via its "payroll service" (no matter who owns it) and maybe a union violation as well. [Sections 8a3 and 8b2 - discrimination on the basis of union activity, in this case meaning that membership or lack thereof causes unequal treatment]

    I think it's outrageous, but the international union won't touch it.

    Any thoughts at all? If I am wrong (at least about the FLSA violation), and this can be justified legally, I most definitely will hang up my member advocate hat and join the resistance (if I can find one).

    I would be happy to fill in the blanks, if there's any information I can provide to further illuminate the situation.

    Thank you.

    editor_u
    Last edited by editor_u; 02-11-2011, 08:25 AM. Reason: eliminating redundant words

  • #2
    Seriously? $25 to get a paycheck? Are you sure that it's really a "payroll processing fee" and not related to some agreement with the union (and yes, I understand that these employees are not unionized) in lieu of union dues?

    What does HR say about this?
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    • #3
      Originally posted by Pattymd View Post
      Seriously? $25 to get a paycheck? Are you sure that it's really a "payroll processing fee" and not related to some agreement with the union (and yes, I understand that these employees are not unionized) in lieu of union dues?

      What does HR say about this?

      Hi, Pattymd,

      Thanks for replying.

      Yes, payroll processing fee it is. The deduction is so characterized on the check stub. It is also confirmed by the union when employees call to find out what's going on. In the case of one job worked by an employee I know, upon being questioned about it, the supervisor told her the same thing. That particular temporary job, not done under a CBA, had an additional bit of strangeness, and all the employees were paid as independent contractors (but the $25 was still deducted as "payroll process fee").

      It is certainly not dues. It is not and never has been so characterized by the union, either, and would not be proper in any case since the union's bylaws do not have a provision charging such dues. Those bylaws, though, would apply to local members also, and in this case the local members are not assessed the fee.

      The fact is that, as mentioned above, the employees in question do pay a percentage of wages (2%, I think) to the local as a result of an obligation incurred by membership in the same international union. This they would have to pay whether the work was done under a CBA or not.

      The employers have no agreement with the union covering this practice that anyone is aware of (I can't imagine the legality of such an agreement, even if it existed).

      What does HR say? The employers are aware of the practice, say they have nothing to do with it, and some of them send a letter to all employees when they are hired that states that the union is charging such a fee. The employers in question are actually rather credulous as to the mysteries and practices of unionland, so whatever the union says, they buy.
      Last edited by editor_u; 02-11-2011, 12:10 PM.

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      • #4
        Some states have specific laws that prohibit an employer from charging a fee for the employer to get paid. In those that do not (and Ohio doesn't have very many wage payment laws of their own, so I doubt that Ohio does have such a law), this would be a violation of public policy, if nothing else.

        I still have a feeling this is something other than an actual fee to get their checks, however.

        But since it's listed as such on the pay stub, I would recommend that one of the employees contact the Ohio Dept. of Labor and get their opinion.
        Last edited by Pattymd; 02-11-2011, 03:15 PM.
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        • #5
          Pattymd, thanks again for your reply.

          Originally posted by Pattymd View Post
          Some states have specific laws that prohibit an employer from charging a fee for the employer to get paid. In those that do not (and Ohio doesn't have very many wage payment laws of their own, so I doubt that Ohio does have such a law), this would be a violation of public policy, if nothing else.
          The relevant section of the Ohio Revised Code [Chapter 4111] is a rather slim volume (I just read the entire thing in five minutes). In 4111.01 (paragraph A) "Wage" is defined as "compensation due to an employee by reason of employment, payable in legal tender of the United States or checks on banks convertible into cash on demand at full face value, subject to the deductions, charges, or allowances permitted by rules of the director of commerce under section 4111.05 of the Revised Code."

          Right. Nothing specific prohibiting the practice in question.

          The rules permitted under section 4111.05 mentioned in 4111.01, above, include those covering "…permitted deductions or charges to employees for board, lodging, apparel, or other facilities or services customarily furnished by employers to employees…" which does not give the employer(s) an out, since there are no customarily furnished facilities or services.

          This all reads rather like the FLSA, and in any case could not be less restrictive than the FLSA provisions.

          I still have a feeling this is something other than an actual fee to get their checks, however.
          Certainly you are right about that. That's just what they're calling it. I would call it extortion if the employees could refuse to pay, but don't dare for fear of losing the rest of their wages. In this case, the employer/payroll-service/union just takes the $25.

          But since it's listed as such on the pay stub, I would recommend that one of the employees contact the Ohio Dept. of Labor and get their opinion.
          Good idea, but probably I'll call them on Monday myself (perhaps I can get one of them to call in addition). I want to be clear on what the exact answer is. I would be shocked if the Department of Labor said it was an OK practice (and could point to an actual statute or regulation permitting something that's not permitted by the FLSA).
          Last edited by editor_u; 02-15-2011, 05:34 AM. Reason: fixed word order in next to last sentence

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          • #6
            If it is, in fact, what they're calling it, then I would call it a kickback.
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            • #7
              Worth trying. The problem is that a literal reading of the regulation indicates that this provision protects minimum wage and overtime only. Still, I agree with the other answer that given the chance a judge will probably not like this.

              531.35 “Free and clear” payment; “kickbacks.”

              Whether in cash or in facilities, “wages” cannot be considered to have been paid by the employer and received by the employee unless they are paid finally and unconditionally or “free and clear.” The wage requirements of the Act will not be met where the employee “kicks-back” directly or indirectly to the employer or to another person for the employer's benefit the whole or part of the wage delivered to the employee. This is true whether the “kick-back” is made in cash or in other than cash. For example, if it is a requirement of the employer that the employee must provide tools of the trade which will be used in or are specifically required for the performance of the employer's particular work, there would be a violation of the Act in any workweek when the cost of such tools purchased by the employee cuts into the minimum or overtime wages required to be paid him under the Act. See also in this connection, 531.32(c).
              Last edited by DAW; 02-12-2011, 08:28 AM.
              "Reality is that which, when you stop believing in it, doesn't go away".
              Philip K. **** (1928-1982)

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              • #8
                Thanks again, Pattymd and DAW for your replies.

                I reached the Ohio Bureau of Labor and Worker Safety late yesterday afternoon (I had almost given up; the phone was busy all day). I told the agent that I was inquiring as to whether a deduction for payroll processing was permitted. She said absolutely not (her tone suggested that she was indignant that anyone would do such a thing -- or, perhaps it was because I would be dumb enough to ask such a thing?).

                An agent at the US DOL just now told me that it did not sound right to her, either, but that she would have the regional office contact me for confirmation. (I have been trying to get through to the regional office since last Monday -- they don't seem to answer their phone -- and left a message mid-week, but they did not call back.)

                These calls might seem to be unnecessary, since (I think) the law is very clear. But I want official confirmation, since the union in question insists that it has checked with the DOL, and says that the agency told them that charging the fee is legal.

                I'll let you know what I hear from the regional DOL office. I can ask them to look into the situation, even though I'm not an employee. The Ohio agency, though, requires a complaint from an affected employee before it will investigate, so I'll have to work on one or more people I know who are engaged by these employers and try to convince them to file one.

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