On September 7, 2016, the New York State Department of Labor (“NYSDOL”) adopted final regulations (“Final Regulations”) limiting the methods by which New York employers may pay their employees and defining mandatory procedures for the use of direct deposit and payroll debit card payments. However, certain laws must be followed when using direct deposit, and they vary by state. Maine: Employers in Maine can require direct deposit. They allow employers to require direct deposit only if they pay at least $250,000 in payroll taxes to the state. Each state may have different laws in effect that could affect your ability to require direct deposit. You asked if direct deposit of a paycheck can be mandatory. The employee must receive all of his or her wages and cannot be made to incur any charges to receive them. N.J. Direct Deposit Laws by State. Under the EFTA, employers can require direct deposit if one of the following conditions is met: Yet even though the EFTA permits mandatory direct deposit, your state may not. There are currently 198 CRT employees who are not enrolled in direct deposit. More than 80% of employees receive their paycheck by direct deposit. Or they still prefer a paper check. While many states have rules limiting or regulating direct deposit of wages, Washington is not one of them. General Information SP-14 Direct Deposit Direct Deposit of Payroll Requirements (1 CSR 10-8.010) Payroll and Employee Reimbursement Direct Deposit Application Paycard Comparison Chart - Effective 01/15/2012 Central Bank In an effort to provide Louisiana state employees with information about accounts available from Louisiana financial institutions for compliance with Mandatory Direct Deposit, the following links to two searchable databases are being provided. Mandatory Direct Deposit Information. … Federal Regulation E sets the overall rules and minimum standards an employer must follow when offering direct deposit and other types of electronic payments (e.g., paycards) to employees. You can determine your state’s stance by examining its wage payment statutes, which may also require that you give employees a pay stub each time they are paid — whether by direct deposit, check, cash or payroll card. Review your state laws for details or contact our compliance team, who can advise you on the legality of mandatory direct deposit for peace of mind. Texas employers can require employees to accept direct deposit only if the employee has a bank account which provides for direct deposit, and so long as there are no fees which would reduce the employee’s pay to an amount less than the applicable minimum wage. Contact any Wessels Sherman attorney to discuss questions regarding this subject. It is the policy of the State of Idaho that all employees paid by the State Controller’s Office (SCO) be required to use the Direct Deposit feature to receive payroll related payments. Keep in mind that pay card alternatives come with their own rules and regulations. Kentucky Mandatory direct deposit is permitted, but employees must be able to withdraw each payment at full face value and employers must pay any resulting service charge. Alaska - Cannot mandate direct deposit.. Arizona: Effective July 20, 2011 an employer may give its employees a choice: either give written consent to direct deposit and designate a financial institution, or be paid by paycard. SUBJECT: Mandatory Direct Deposit Employees currently receiving a hardcopy paycheck (paper warrant) through Central Payroll will need to take action prior to October 1, 2013. New York: New York employers can’t require direct deposit but can pay by this method with an employee’s advance written consent. You’ll get to explore thousands of resources that will help you be confident in your HR decisions, increase your productivity and deliver on your business strategies. The EFTA is a federal law enacted in 1978 to protect consumers when funds are transferred electronically. Assembly passes bill requiring direct deposit for state employees Updated Mar 30, 2019; Posted Jan 28, 2013 The N.J. If you are not required to file income tax returns for 2019 New Hampshire: Employers can’t mandate direct deposit; workers must authorize it in writing. Most states have adopted Regulation E's provisions into their wage payment laws. The Society of Human Resources Management has a useful compilation of state laws on wage payments and direct deposit available here. In this case, the federal Electronic Fund Transfer Act or EFTA specifically overrides some provisions of Oklahoma law that forbid wage payment by mandatory direct deposit. For instance, employers in Kansas, Indiana, Texas, Missouri and South Carolina can require employees to accept direct deposit, but the employer must provide another payment method — such as payroll card, cash or check — to employees who do not have a bank account. In some cases, a state may not have a law governing direct deposit, in which case you’d simply follow the EFTA requirements. Compare employee payment methods by downloading your free guide, “A Guide for Deciding How to Pay Your Employees.” Federal payroll card regulations. However, even these states maintain a mandated exception for employees who don’t have a bank account, allowing them to opt for a traditional paycheck, payroll card, or cash compensation. With advantages for employers like time and cost savings, greater security, and increased satisfaction thanks to the convenience and reliability of automated transfers, you may want to make direct deposit mandatory. Indiana, Kansas, Minnesota, Missouri, South Carolina, Texas, Virginia, Washington, and West Virginia allow employers to require direct deposit. While a handful of states permit employers to mandate direct deposit (usually with some restrictions), most, like Illinois, allow direct deposit only with the agreement of the employee. Federal Law The Electronic Fund Transfer Act (EFTA), also known as federal Regulation E, permits employers to make direct deposit mandatory, as long as the employee is able to choose the bank that his or her wages will be deposited into. You’ll want to review the sections that cover payment of wages. The Final Regulations, which closely track earlier proposed regulations, will become … “Mandatory” means What if my salary or payroll deductions change? States without mandatory direct deposit laws follow federal laws. States may also allow paycard vendors to charge em­ployees fees, beginning with the second transaction. Because federal law allows mandatory direct deposit, employers in states without laws can require this payment method. Mandatory Direct Deposit Page 4 of 12 State of Georgia-SAO . Before diving into pay card laws by state, familiarize yourself with federal payroll card regulations. While many states have rules limiting or regulating direct deposit of wages, Washington is not one of them. © Copyright 2021 Complete Payroll Solutions: HR & Payroll Services & Benefits, COVID-19: Follow our dedicated page for updates, The employer chooses the bank but offers another payment method. Arkansas allows employees to opt-out of direct deposit with a written statement. Gov. The U.S. Bank FOCUS paycard constitutes a direct deposit account. Alternatively, if at least two-thirds of company employees agree to accept payroll direct … Workers simply have to be able to make an initial withdrawal of the entire net pay without incurring additional costs. 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