New Legislation Sends Strong Message To California's Banking Industry

LOS ANGELES, CA, June 8, 2004—The recent passing of SB 1904 by the California State Senate, which prohibits banks from charging fees to cash paychecks drawn on business client accounts, sends a strong message to the banking industry and should favorably impact employers and thousands of employees in California, according to Nicholas Roxborough, the attorney who filed class action lawsuits against Bank of America and Wells Fargo to end this practice and reimburse employees for fees already paid to the banks.

“The fact that two-thirds of the senate, both republicans and democrats, voted for SB 1904, should convince the governor to sign it,” says Roxborough, a partner of Los Angeles based Roxborough, Pomerance & Nye LLP. “We are pleased our lawsuits against Bank of America and Wells Fargo have further enhanced public awareness of this issue and that this new legislation will help create a safe harbor in the future for all California employers.

Roxborough hopes the new legislation will encourage Bank of America and Wells Fargo to seriously examine their exposure under the lawsuits filed on behalf of California employers last April. The suits allege that these bank fees have placed California employers in violation of Section 212 of the California Labor Code which require that every employer provide his or her employees with a location where they can cash their paychecks without a discount. While many employers assume that to be the bank where they have a business account, many banks have been begun charging for the service—often without the employers’ knowledge—leaving employers liable for violation of the Labor Code and subject to civil penalties.

The suits seek injunctions to stop the banks from charging the $5 per paycheck cashing fees and obtain a refund of all such fees already paid by thousands of employees in California—mostly lower-paid workers who don’t hold personal checking accounts and rely on their employers’ banks to cash their checks.

SB 1904, authored by Senator Dean Florez, D-Shafter, would prohibit a bank from charging a fee to cash any paycheck drawn on the account of one of the bank’s business clients. The measure will be heard by the Assembly Banking and Finance Committee at the end of this month.

“The Senate’s approval of SB 1904 is a significant step in protecting employers from potential liability for Labor Code violations and will help employees keep more of their hard-earned wages,” adds Roxborough.

Roxborough, Pomerance & Nye LLP (RPN) is a Los Angeles-based law firm providing expert legal counsel and representation to the business community. Established in 1996, the firm offers a broad range of legal services in all facets of civil litigation with its primary focus on business, insurance, employment, and wage and hour litigation. It is the first law firm in the country to specialize in and make new law when representing employers in workers’ compensation premium and dividend disputes with insurance carriers.
 

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