The Legality of Corporate 'Banks'
Attorney General rules that companies can legally hold worker wages as interest-bearing deposits.
It is not unlawful for a corporation with numerous employees to permit them to leave a portion of their wages with the employer, who pays interest on the funds. Attorney General W.P. Bell stated that while this transaction technically functions as a banking business, it is not prohibited by law because the employer is not advertising as a banker and is not receiving deposits from anyone outside the company.
“A transaction of this kind... would, technically, come within the definition of doing a banking business, but it is held not prohibited by bank law.”
This reflects the extreme power imbalance of the labor era, where employers often acted as the sole financial institution for their workers. The debate over who manages the workers' savings and the definition of a 'banking' institution persists in modern debates over corporate financial control.
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