Illinois regulators have revoked the business license of a check cashing store they say was working with a broker to prey on workers through the unlawful collection of high fees.
According to the order, and this article in ProPublica, the 26th and Central Park Currency Exchange arranged a deal with a labor broker to funnel temp workers to its check cashing business.
Under the arrangement, at the end of the week, workers would allegedly pick up their paychecks from the temp agencies and bring them to check cashing places in the Little Village neighborhood of Chicago.
The check cashing store named in the revocation order, for example, made an arrangement to collect fees for a broker who supplied workers for Select Remedy, one of the largest industrial staffing agencies in the United States.
The store distributed the checks only after it had deducted fees for the broker and for its services, according to the Illinois Department of Financial and Professional Regulation.
“The workers, earning minimum wage, were charged fees by the licensee well in excess of the amount permitted by law,” said Francisco Menchaca, director of the Illinois Division of Financial Institutions.
The check cashing store’s manager reportedly said the practice was merely a "convenience" offered to the temp workers, who would get charged a reduced rate of $1 plus 1% of the check's amount.
However, Leone Bicchieri, director of the Chicago Workers Collaborative, said the arrangement often resulted in workers facing excessive fees, waiting weeks to get paid or getting trapped in a "finger-pointing game" between the staffing agency and the broker over missing pay.
It is illegal in the state of Illinois, and many others, for staffing agencies to force a worker to pay fees for cashing a paycheck.
But some workers, who had accounts at banks that cashed checks for free, told ProPublica they would not even receive their paychecks unless they agreed to pay the check cashing fees.
There are also federal laws that indirectly protect wages like the Fair Labor Standards Act which says employees must receive all their wages in full.
“It’s positive that a public statement has been made,” Bicchieri told ProPublica, “that shady dealings between temp agency raiteros (brokers) and check cashing places are not going to be tolerated.”
The store has appealed the license revocation, and an attorney for the check cashing store said he didn’t believe “the currency exchange did anything wrong other than to serve its customer.”