Manditory Direct Deposit

Bonnie · May 2001

Has anyone required that their employees use direct deposit. Can this be made manditory? We are in Indiana. Thank you.

Bd of Ed · May 2001

We require all new employees use direct deposit.

MKT · May 2001

I work for a bank in Indiana and we also require all employees to use direct deposit into an account with our bank (note: accounts are free to employees). A couple of new hires have complained and we advise them that they are free to move the money from our bank to another institution immediately after deposit. I know of one other company (headquartered in St. Louis), operating in Indiana, which requires direct deposit. Hope this helps.

Bonnie · May 2001

Thank you for your help. FYI: U.S. Dept of Labor, wage & hour sent me some information. Rev. 563 30c00 (b) states The payment of wages though direct deposit into an employee's bank account is an acceptable method of payment. They told me on the phone that is can be made manditory.

Margaret Morford · May 2001

Just to be sure check your state laws as well. DOL only speaks to federal laws. Many states prohibit mandatory direct deposit.

Margaret Morford

tfevergrn · July 2002

Hi Margaret,

We are a multi-state employer and I would love to have all employees on direct deposit. I have reviewed all previous direct deposit posts and I need further clarification. What states do not allow the mandating of direct deposit and does it apply to all employees, both current and new? Can you mandate direct deposit in all states for new employees? If you can not provide me with this information, where can I go to get it without having to contact every state? Thanks in advance for your help!

Margaret Morford · July 2002

While I do not have this information, I think Christy Reeder (What would we do without her!) compiled a state-by-state list. I'll call her an ask if she has it and if she will post it. Stay tuned for Christy to the rescue!

Margaret Morford
theHRedge
615-371-8200
[email]mmorford@mleesmith.com[/email]
[url]http://www.thehredge.net[/url]

tfevergrn · July 2002

Great, thank you!

System · July 2002

I have a few gaps in my state-by-state chart. Let me first contact a few attorneys in those states and see if I can close some of the gaps. I'll be back.

Christy Reeder
Website Managing Editor
[url]www.HRhero.com[/url]

Don D · August 2002

Our company mandates direct deposit for our salaried ee's only. A great number of our hourly ee's do not have a bank account and can't get one, I'm told. Banks will not open accounts in this state for some people. It is discretionary with the banks and they are riding pretty hard on some folks who have a credit problem history or bounced checks with other banks. Apparently our state does allow mandating this. I never really bought the concept that you can mandate it, but, we do and the admin nightmares we thought we foresaw never developed. Most banks will let your ee's open free accounts if the company runs all the money through them. With our system, the main bank we use receives the lump direct deposit. They will then route your portion to ONE receiver of your choice. That receiver can be your free account with them or another account of your choice anywhere. Our primary bank will NOT distribute your money any other direction (e.g. half to your account, a fourth to your credit union and a fourth to your girlfriend's account). We did run a survey of all salaried ee's 2 years ago when we were looking at doing this. Most were either for it or did not care one way or the other. Surprisingly, only ONE ee sent back the survey saying he objected. His reasoning was that his wife had never known what he makes and now she will. Sorry Charlie.

Carol CA · August 2002

We don't mandate direct deposit, but we highly encourage it. I agree with Don that I don't buy into why we would want to mandate it. We also have production workers who claim they have difficulty in getting a checking account. If they want to receive a manual check, I'm OK with that. It's their money!

tfevergrn · August 2002

Hi Christy,

Any luck with your list? This will be such a BIG help to us, not to mention the postage expense we might be able to save! Thanks in advance for your help.

System · August 2002

I didn't get the full list confirmed, so if your state is one of the states marked in red, make sure to verify with an attorney in your state. I'll keep updating the list as information comes in.

Here's a link:
[url]http://www.hrhero.com/directdeposit.html[/url]

Christy Reeder
Website Managing Editor
[url]www.HRhero.com[/url]

Pork · August 2002

Don't believe that you want to make it mandatory; however, we have recently changed to DP. We allow all employees to pick up their weekly paychecks from the home office (sometimes the distance is as far away as 75 miles); each can choose to have the check mailed (our post office will not guarntee delivery, but maintains a two day deliver after we provide the mailing group to the post office before 5PM wed, thus we meet the faw requirement to pay within the 40 hour next week); the third option is DP, (DP provides delivery of pay by 10 AM the next business day into checking, savings, and credit union accounts). DP is not mandatory, but it is pretty close. We have had three checks get lost in the mail. All three have never been cashed, we therefore cut another check but only after the 15 working day rule has passed. In one case the employee paid the $25.00 dollar fee to stop payment and we cut another check that day. No one has lost any time nor money with the DP system. We have been able to void one check turned in as washed and laundered. We have had one check lost after it was picked up by the employee. We bore no responsibility, he paid the stop payment fee, but it was to late someone had already cashed the check through a grocery store. He lost and is now on DP! Good luck, for we in payroll/HR it is the only way to go!

System · August 2002

What is DP? Also, has anyone heard of issuing some type of debit card to employees and just activating it with the appropriate amount of money each payday? I'm not sure exactly how it is supposed to work, but I think one our local temp agencies is doing this with their employees.

Manditory Direct Deposit

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