I read an interesting article by Justin Brown and Lisa Schreter of Littler Mendelson about the usage of cryptocurrency as a way of paying employees. As if those of us who advise management did not have enough headaches, this nuance adds another unneeded and unwelcome chore to our tasks. As the article notes, cryptocurrency is a “digital peer-to-peer payment system secured and verified through private codes housed on an encrypted public ledger called blockchain, without the use of banks or any other financial institute.” As professional athletes (Odell Beckham, Jr.) and others are being paid in this manner, it seems like it is only a matter of time before employers everywhere will either want to pay or be asked by their workers to pay them in cryptocurrency. This demands a heightened awareness of the pros and cons of this protocol.
The issue is whether it is permissible under the FLSA to pay workers in this manner. Wages must be paid “in cash or negotiable instrument” according to the FLSA. As the article notes, States often have stricter requirements, such as California, which prohibits payment in “scrip, coupon, cards, or other thing redeemable, in merchandise or purporting to be payable or redeemable otherwise than in money.” As cryptocurrency is obviously not cash or otherwise negotiable in this country, employers may run into all kinds of problems (e.g. Wage Payment laws) if they seek to pay hourly or salaried employees with cryptocurrency.
There have been no laws...
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