Direct Deposit

HollyatSouthEastBank

I work at a bank. We do direct deposit. I know in Tennessee that we can have all employees direct deposit. But, can we make them use our bank for this?

Thanks, Holly

joannie

It's been many years ago, but when I worked at a bank all employees were required to open an account and be paid by deposit slip. They also frowned upon employees having checking accounts at other banks and if they did, would not allow personal account deposits from the employee's other bank account.

Dutch2

According to Regulation E Commentary:
Paragraph 10(e)(2)
1. Payroll. An employer (including a financial institution) may not require its employees to receive their salary by direct deposit to any particular institution. An employer may require direct deposit of salary by electronic means if employees are allowed to choose the institution that will receive the direct deposit. Alternately, an employer may give employees the choice of having their salary deposited at a particular institution (designated by the employer), or receiving their salary by check or cash."

HollyatSouthEastBank

Where did you find that statement? What does that last sentence mean (designated by the employer), it sounds like they just let it go either way? It is for your state only?

KSR6450

Reg E is a banking regulation about EFTs. I will send you my Banking Reg's ABCs if you like.

E 12 CFR 205 Electronic Fund Transfers
Establishes the rights, liabilities, and responsibilities of parties in electronic funds transfers and protects consumers when they use such systems

Regulation E provides a basic framework that establishes the rights, liabilities, and responsibilities of participants in electronic fund transfer systems such as automated teller machine transfers, telephone bill-payment services, point-of-sale (POS) terminal transfers in stores, and preauthorized transfers from or to a consumer's account (such as direct deposit and social security payments). The term "electronic fund transfer" (EFT) generally refers to a transaction initiated through an electronic terminal, telephone, computer, or magnetic tape that instructs a financial institution either to credit or to debit a consumer's asset account.
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Dutch2

Holly - this document was provided to me by our Chief Compliance Officer a few years back. It may be a state reg. The last statement the employer can designate which financial institution the employees can use for direct deposit only if they also give the ee the choice of direct deposit or a check.

Dutch2

I checked with our Compliance guru and they assured me that this is a Federal Regulation.

HollyatSouthEastBank

Where can I find that statement? I have a copy of the Banking Regulations ABC's but maybe I am missing it.

Dutch2

All I have is a copy of one page showing: Reg E Paragraph 10(e)(2)
Might you check with your Compliance Officer.

KSR6450

[font size="1" color="#FF0000"]LAST EDITED ON 12-03-08 AT 09:53AM (CST)[/font][br][br]I bank elsewhere, as do our CEO and CFO ...we have some nosy Nellies here. Wouldn't it be a waste for your Bank to have accounts that are only being used for direct deposit? These accounts will have to be serviced (statements, maintenance, etc.) as well as monitored for compliance issues. You will have to make sure they maintain a positive balance and write up the employees who abuse their accounts. I wish all our employees banked elsewhere x0:)

Edit: The cost for us is the same regardless of where the check is deposited.
Every time one of our auditors is here I have to review all the employee accounts and print out all their statements. Then I have to go through individual transactions the auditors feel might be suspicious (transfers, etc.) and get explanations for them.

ACU Frank

I like it when our employees bank here. It sure makes it a lot easier to fix things when payroll errors occur. It makes me look like the hero when I can tell the employee "No - your manager didn't tell me about your raise. Let me see if I can straighten this out and correct your account by lunchtime."

KSR6450

I don't make payroll errors! x0:)
But when Paychex has made errors it takes the same amount of time to correct it regardless of where the employee banks.

ACU Frank

Maybe we just have more flexibility with our system, but I can ensure availability of funds immediately if the account is with us... I can't do that if the employee has direct deposit at another institution.

cnghr

I also work for a bank, and having the payroll direct deposit accounts here makes it so much easier for all involved. When we pay, we don't have to go through the normal direct deposit process, we just receive a file from our payroll provider and with a mouse click or two, the employees receive their pay. They are assured that it will be in their account at the same time every payday (unlike my husband's direct deposit from his employer, which can show up any time within a 2 or 3 day window so we're never quite sure when to count on it).

It's also easier to fix errors; the other day we found out an employee had quit a full week before anybody let us know and she'd been paid for an extra week. We were able to reverse the amount she'd been paid back out of her account immediately, reverse the payroll on the payroll system, and deposit the correct amount into her account, all within about 15 minutes, which we couldn't have done had her payroll been direct deposited at another financial institution.

We don't say that employees have to use our bank for their direct deposit account, but one of the "perks" of working here is that each employee is given two free deposit accounts and people appreciate the value of a free account enough that they don't hesitate to open one and use it for their payroll.

Cheryl S SPHR

I am also with a bank and have been told by our compliance department that we cannot require our employees to deposit their pay only with our bank. So, we let them designate where they want the deposit made. Haven't run into any problems with that.

Cheryl