I work for a fairly large national bank, and if you don't chose to open an account with the bank, that is how you get paid. As far as I remember from the orientation, a paper check wasn't an option. Then again as a bank employee, finding a fee free ATM to use is not as much of an issue.
I do think the ATM fees are more of a problem then the cards themselves (which as the article pointed out gives those without bank accounts freedom from check cashing fees). Charging a fee for a balance check is pretty ridiculous, though I would be surprised if there was not a free phone or web based method of checking the cards balance available.
While I do think the debit card option is better for employees, I agree that making it the only method is not right, and it appears that is what is going on in some of the cases. On the other hand I do think if employers are going to utilize this option, they bear some responsibility for making sure their employees have access to ATMs affiliated with the bank being used to remove the fee issue.