Among the dozens of lobbying battles playing out in Gov. Jerry Brown's office this month is one over an obscure bill that would curtail a growing trend: paying workers with debit cards carrying wages that can be withdrawn at stores, banks and ATMs.
Unions are backing Senate Bill 931, which would put new restrictions on so-called "payroll cards" by limiting the fees issuers can charge when workers access their wages.
Banks are fighting the bill, arguing that the proposed fee limits will make it impossible for them to profit on the product. They say the bill is so restrictive that it amounts to a de facto ban on payroll cards.
Employers have sided with banks in the effort to shoot down SB 931. They like payroll cards because they're cheaper to process than paper checks, and – unlike direct deposit – can be issued to low-wage workers who don't have bank accounts.
The bill is among hundreds that Brown must sign or veto by Oct. 9.
This one puts him in the middle of a classic fight. On one side are more than a dozen labor unions. On the other are the Chamber of Commerce and banks, credit card companies, retailers, grocers, builders, restaurants and other employers.
Angie Wei, a lobbyist for the California Labor Federation, which sponsored the bill, said she thinks Brown will be sympathetic to the bill's goal of making sure workers don't lose too much to card fees.
"I feel that Governor Brown will be shocked that a worker cannot get his or her full wages without (paying a fee)," Wei said.
"We want to make sure that workers are eyes-wide-open, that these are voluntary cards, that you get fees disclosed to you up front – and we try to get a modicum of protection to get your wages out for free."
Opponents are doing what they can to convince the governor that payroll cards are a good option for business owners and their employees.
"We are reaching out to individuals in the Governor's Office and the agencies and departments that we think we have a shot with," said Matthew Sutton, a lobbyist for the California Restaurant Association.
The cards are most common in industries where many workers don't have bank accounts – generally in low-wage retail or restaurant jobs. About 500,000 California workers are being paid with payroll cards, according to the California Bankers Association. Nationwide last year, about 1.7 million workers were using payroll cards – but that number is expected to grow to 5.4 million in 2014, according to a bill analysis.
The issue rose to the Legislature's attention through the office of Assemblywoman Mariko Yamada, D-Davis. Her staff began to hear concerns from people who were issued the cards while working at local malls in stores including Bath and Body Works, Victoria's Secret and Things Remembered. 7-Eleven and Circle-K have also issued some, Wei said.
While many workers enjoy the convenience of being paid with a debit card, others complained of steep fees. Wei said one worker who lived in Vacaville was issued a payroll card that could be cashed out for no charge only at a bank in Anaheim.
Fees vary among banks, but some charge cardholders $2.50 for monthly maintenance, $2.50 for an ATM withdrawal, $5 to load wages, $5 if they cancel the card, $10 to replace a lost card or $29 if they overdraw, according to a fee list provided by the Labor Federation.
"These are the poorest workers, these are low-wage workers and they need every penny they earn," Wei said.
The bill would prohibit fees for loading wages and require one free withdrawal per pay period from an out-of-network ATM, two free point-of sales transactions per pay period, three free phone calls to customer service each month and the option of receiving free printed statements.
Those provisions are too onerous, said Beth Mills, a spokeswoman for the California Bankers Association. Fees are valuable income for banks, she said, and workers already have adequate protection in the use of payroll cards.
"Employees must opt in," she said. "If you do opt in for a prepaid card, the schedule of fees are all laid out. … You would have all that information in front of you before you are issued the card."
Yamada's original payroll card bill stalled early this summer. A new version was written into a Senate bill a week and a half before the legislative session ended, drawing scores of lobbyists to the Capitol for a last-minute push.
On the last night of the session, lobbyists for labor unions and banks filled the hallway outside the Senate, grabbing lawmakers as they left the chamber. The bill squeaked through the upper house, getting just enough votes to pass.