Direct Deposit Mandatory

We are a small company in Michigan and our Bank just called and stated that it is illegal to mandate direct deposit for employees.

Now I know for a fact that there are several large corporations in Michigan that require all employees to have direct deposit for their payroll.

Can anyone shed any light on this for me? I have not had the chance to do any research as this just came up while I was on this site. - Just a little baffled by this.



  • 6 Comments sorted by Votes Date Added
  • The bank is correct. You may strongly encourage your staff and even offer incentives, however, if you have an employee who wants a paper check -- gotta do it.
  • It must depend upon the state. In Washington we can require Direct Deposit as long as their is no cost to the employee.
  • It does depend on the state. In Oklahoma you can make direct deposit mandatory for new hires, but not for existing ee's. If they were getting a paper check, they still can.
  • Yep it is by State. We can mandate that all ee's are paid via direct deposit but we cannot tell them which financial instituion they can use. So they can use any bank, credit union, etc. and the money can be deposited into any account they have: checking, savings, etc... We have several ee's that have their payroll split into multiple accounts each payday.
  • I agree with others that it depends on your state's wage & hour (payroll) laws. In Oregon, we cannot require an employee to accept direct deposit or a debit card as the method of receiving their pay. We need to obtain each employee's consent to pay by direct deposit/debit card.
  • Yes, specific determination is made state by state. To avoid confusion, here is the guidance for Michigan:

    "Employee shall not deposit employee's wages in bank, credit union, or savings and loan association without employee's written consent, obtained without intimidation, coercion or fear of discharge or reprisal for refusal to permit deposit. Mich. Comp. Laws Ann. 408.476

    The State DOL takes the position that an employer may not mandate direct deposit."

    Maryland's is quite similar, but my original response was because you are in Michigan.

    Best regards,

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