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Company Store Money Returns
By Richard Giedroyc, World Coin News
July 24, 2013

This article was originally printed in World Coin News.
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The Truck or Tommy system is dead, isn’t it? The term truck system originates from the French word troquer, a reference to exchange or barter. The truck system was meant to be a free exchange of labor for goods, with the employee receiving food and shelter from the employer in return for his work.

This is where company store money comes into play. Since company store scrip is only redeemable at the company store at company store prices, this is what the ballet 16 Tons with its famous phrase “I owe my soul to the company store” originates.

The system where people are paid in something other than legal tender currency existed all over the world. It still exists in some third world countries. In Great Britain the practice was outlawed by the early 20th century through the Truck Acts.

In the United States only Wisconsin still allows the practice, and it is limited to forest product industries in remote areas where the system actually makes sense. The Mexican Supreme Court of Justice ruled in 2008 that Walmart Mexico must cease paying its employees in vouchers only redeemable at Walmart stores.

In an 1827 court case in Manchester, England, the plaintiff stated he had been paid two shillings over a nine-month period. The balance of what he had been owed? “He was obliged to take [in merchandise] from the manufacturer’s daughter, who was also the cashier.”

If you think that is the end of company store money in this part of the world perhaps you need to pay attention to a court case filed in June in Luzerne County, Pa., on behalf of Natalie Gunshannon and other employees of a local McDonald’s restaurant franchise.

According to the lawsuit, Gunshannon received a debit card along with her first paycheck. The paycheck and payroll debit card combined equaled her pay. The J.P. Morgan Chase payroll card, according to the lawsuit, includes a $1.50 minimum charge for any ATM withdrawals, $5 fee for any over-the-counter cash withdrawals, $1 fee to check the balance of the debit card, 75 cents charge per online bill payment, and $15 fee to replace a lost or stolen card. When these fees are considered, according to Gunshannon, she is being paid less than minimum wage.

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Gunshannon’s attorney Mike Cefalo is quoted in an Associated Press story as saying state law entitles employees to choose to be paid by options including check or cash. He didn’t mention debit cards.

A Citizens’ Voice newspaper article reported the American Payroll Association as saying state officials have endorsed payroll cards as a legal form of wage payment. The AP story adds that the state Department of Labor and Industry advised the APA in 2008 that employers need the employee’s permission before paying wages with either payroll cards or by direct deposits. Gunshannon has denied agreeing to these terms. (The lawsuit has been filed against the local McDonald’s franchise, not against the McDonald’s corporation.)

There were advantages to employers using company store scrip in the past. Among these advantages were that the employee had no money should the employee change jobs, and the company could recoup some of its wage expenses through the company store.

Today, should the idea of payroll cards become popular with employers, it is likely the employer will negotiate discounts off the face value of these cards for bulk purchases. The employee will likely incur charges by using the cards. There is no guarantee the cards will be universally acceptance among merchants, suggesting once more the company store might be resurrected for redemption purposes.

There are likely third world manufacturers who are still paying employees in something that is a substitute for cash. The question now taking center stage is if employers in industrialized nations might take a serious look at payroll debit cards as an alternative to paying wages in cash.

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