Employee refuses to use Direct Deposit

We are considering making Direct Deposit mandatory. We only have a small number of employees not currently using DD. We have a long term employee that states he will never go DD. What happens if an employee refuses Direct Deposit? Any suggestions from past expeniences would be greatly appreciated.


  • 30 Comments sorted by Votes Date Added
  • LC:
    Best check with your states' Wage & Hour folks, we went Direct Deposit, but we were not allowed to go mandatory. Instead we went positive on the change over and offered an award for going DD. You can be very creative and offer just about anything. We had a good number who understood the value and we only offered a guarntee that their money would be available to them on Thursday morning by no later than 10:00 AM, otherwise, their check goes in the mail on Wednesday afternoon before 5:00 PM and some are now getting their checks on Friday/Saturday or later if the US Postal service doesn't get it distributed.

    WE at first had an option to pick their check up at the home office; that option for the remote locations has been cancelled. DD and Postal are the only two options.

  • Unless you have the capability of opening an account for him to directly deposit the money in it yourself, I can't see where you would have an option but to cut him a check. When it gets to him late or lost in the mail a few times, he may change his mind. When this happens and he complains, I would say "The only other option you would have would be to have your check directly deposited to ensure your funds are available on payday."

    I can't, for the life of me, figure out why someone would prefer to stand in line on Friday afternoons to deposit their paycheck when they could be home with their feet up, having a nice, cold glass of wine.
  • Rockie - in response to your question regarding, I have an answer...

    Several years ago I worked for a union facility and we were looking at goingto mandatory direct deposit. Many workers had a problem with this and we couldn't understand why so we talked to the workers and found out that many of them "hid" the overtime pay from their spouses. Their spouses knew what an employee made on a standard 40 hour week but when you add overtime, it is difficult to figure what the net will be. Anyway these men (yes it was the men who voiced the biggest complaint)went directly to the bank after work, cashed their checks and gave their spouse the cash only after taking a little extra for themself to use for whatever. Going with direct deposit takes that option away. Pretty funny, huh?

    Anyway, just thought I would share that.
  • >Rockie - in response to your question regarding, I have an answer...
    >Several years ago I worked for a union facility and we were looking at
    >goingto mandatory direct deposit. Many workers had a problem with
    >this and we couldn't understand why so we talked to the workers and
    >found out that many of them "hid" the overtime pay from their spouses.
    > Their spouses knew what an employee made on a standard 40 hour week
    >but when you add overtime, it is difficult to figure what the net will
    >be. Anyway these men (yes it was the men who voiced the biggest
    >complaint)went directly to the bank after work, cashed their checks
    >and gave their spouse the cash only after taking a little extra for
    >themself to use for whatever. Going with direct deposit takes that
    >option away. Pretty funny, huh?
    >Anyway, just thought I would share that.

    Guess I never thought about that as I have never had to "hide" anything from my spouse. I guess some men must have to resort to such measures.

  • My suggestion to those ee's is to open a second account that their spouse doesn't know about and have a certain amount put in it each week.

  • What you're not factoring into this is that some of the employees don't go to the bank to deposit the check then the creditors could get thier money. I have employees who go to Wal_mart and if your purchase is 20% of your check then they will cash the check for you.
    There's ways around everything.
    Currently if an ee doesn't use DD we charge them $5.00 for each check we have to write.

  • Just to offer a reason for this, in Nevada, many of the casinos offer a free spin with a chance to win some big money if they cash their paycheck in the casino. Of course, they hope to keep a little bit or a lot of it before the person gets out the door. I also had an ee that refused to direct deposit, even with some great incentives. One day after a few low carb miller lights, he admitted he did not want his spouse knowing how much he made because he spent quite a bit of the money on a girlfreind on the side.

    People have their reasons and we do not always want to know them.
  • Do you or can you charge for the Direct Deposit service?
  • >Do you or can you charge for the Direct Deposit service?

    We don't charge for this service and I have never heard of anyone who did. It is really an advantage to the company as well as the employee as it saves time and money not having to cut individual payroll checks and/or postage to mail them.

  • Thanks to all for trying to help. I really appreciate it. I was hoping someone had this problem and had a "magic" answer for me.

    I have also heard that one of the problems with DD was the issue of hiding money. Here that should not be a problem. Just set up another account and divert money to that account.
  • Maybe not using DD is his religious preference, in which case you need to do an analysis of undue hardship and make reasonable accomodation if appropriate. Just kidding.
  • We offer D/D, but not mandatory. We have about 50% or slightly over participation in D/D. I run the paychecks but I have D/D and check because I'm the one who has to get the lunch money, allowance, etc. and teller machines only disburse $20 bills. Our payday is Thursday, to avoid Friday fun, and we do not have an absence problem on Fridays. Some of our ees have had critical problems and can't get a checking account. D/D still prints out a document for distribution, just not in the form of a check.
  • We have approximately 75% of our employees who use direct deposit. There are always a few employees, who, due to credit issues, cannot have a checking account, therefore, we would not try to make this mandatory. I'm curious about the response that stated it doesn't cost as much as issuing a check. Our payroll provider charges us "per pay" whether it's a real check or a direct deposit.
  • Massachusetts is one of the few states which allows mandatory direct deposit - we however, have to allow the employees to chose the bank.
  • Are there states that actually allow mandatory D/D and NOT let ee's choose bank?

  • [font size="1" color="#FF0000"]LAST EDITED ON 03-04-03 AT 02:24PM (CST)[/font][p]A few years ago we had nonmandatory DD with just one bank. Two years in a row, we discovered on Friday morning the money was not in our accounts, uncharacteristically. The person responsible at the bank for distribution was on a 2 week vacation and the bank did not assign a backup. They were leaving her work for when she returned. I worked in mfg at the time. I dropped DD immediately.
  • I agree with Rockie. Direct Deposit requires your ee to maintain a checking account. You cannot require having a checking account as terms of employment.

    I would never admit this to an ee, but I can understand why your "old timer" doesn't want to go DD, because he knows that errors can be withdrawn out of the account as well as deposits put in.
  • We have been doing mandatory DD for about 2 years. I contacted the Okla. DOL about it. They said (in Okla) that you cannot force your current employees to do it, but you can make it a condition of hiring for new hires. Some of our staff grumbled at first, but only two really held out to the end, saying they'd quit first.

    We tell new employees before background check or anything that it is a requirement. We also give a grace period to get it set up. All "live" paychecks come to HR, so they have to face me every payday with my gentle reminders that they are not in compliance.

    Our bank, which is near us, provides free accounts and will open them for any of our employees. We've only had one or two who absolutely couldn't qualify for an account due to previous banking problems. They have quit on their own, so I've never had to force the issue with anyone.

  • WHOA! E/ee can't qualify for an account, and because he can't qualify for an account you can't make DD, and because of that e/ee can't work? Is that what we're all about? Is this how far we've come? What happened to the spirit of those folks who settled OK, and virtually every other part of this great nation. It's bad enoough Bib Brother has hsi thumb in everything we do, from how big we build our garage to almost every other facet of our personal lives, now emp/er has his thumb in the other end forcing us to use some other commercial service or not be allowed -ALLOWED? - to work! Where I bank, or evn IF I bank should be no ones business. Lots of folks hate and distrust banks - with good reason - why should we as em/ers be permitted to force them to yse them? There is way too much electronic surveillance going on, much of it at the behest of Bib Brother, and, much of it obtained via the records of the financial apperatus. We have allowed so much of our individual freedoms to be eroded, and yeah, this is just a small, mild ly inconvient not very inmportant issue - but - it is indicative of how wrong headed our thinking has become. We no longer value individualism. Conform or die (or at least not work)! Surely emp/ers have more important thing s to worry about, like quality, productivity, service, or at least they should.
    Sorry! Just really ticked me off this AM. I use DD myself, but did so only to set an esample for others, but not everyone agreed, and I applaud them for it, and would never penalize them for thnking for themselves. The beauty of this whole country is that we are free to make any and all of our own decisions, good or bad, except those that profoundly affect others negativelyu. At least that's the way it used to be. Hell, I don't even own my own house - with all the regualtions and taxes and other BS the gov nmt just lets me lease it for awhile, and even then I have to have my house numbers in a certain location in a minimum size in a particular color so emergency crews can see it. Maybe I don't intend to rely on emergency crews - would never call them, I choose to be responsible for myself under all circumstances - novel thought huh? Sorry, the government will hold you responsible for everything it deems necessary, but really doesn't want you to embrace responsibility for yourself. WHY? Because, if we all accepted lots more of responsibility for ourselvbes, governmentg would larghely be out of business - and out of our lives and our pockets - and WE WOULD ALL BE A HELLUVA LOT BETTER OFF!!!! But we've brought it all on ourselves, we look to the government, and now the employer, to provide for every little thing we think we need, and then we wonder why our taxes are so high and the services are so poor. Give me a break! Sorry again, just can't seem to get settled down this AM - must be the cold air foreshadowing the coming of another Michigan winter that has me wound up. But I realy mean (almost) everything I said. No apologieas this time! Have a great day! It's still the best country in the world - it could just be a whole lot better if we celebrated individual thought and responsibility. We need neither government nor employer to be our Mother.
  • Relax, okay? I'm not going to fire someone only because they can't get an account, if they've talked with the person at our bank who will bend over backward to do it. Direct deposit is a considerable cost savings for payroll, the employees who have difficulty managing their money usually just go to the bank and withdraw all of it on payday. It saves them check-cashing charges too.

    This week I had a banker come by to market a new program that works like a debit card and is available only to those who are prohibited from opening accounts because of a previous problem.

    Most of our staff have thanked us, because some of them wouldn't have been able to open an account otherwise and it is helping them build their credit history.

    We also participate with a credit union that gives free accounts, so they have options. But the bottom line is, it's still a free country. They know up front that DD is our policy. They can choose to work elsewhere.
  • I haven't seen the huge savings yet. Maybe it's because we're under 100. We distribute checks, don't mail them, no savings there; a direct deposit stub is printed, so maybe an incremental savings between 20# bond and checks; our system allows for up to 8 institutions; our policy provides for up to 2 accounts per employee, although there's no particular reason why it couldn't be more. Why would a company have to define only one bank? We currently process D/D to 5 or 6 different financial institutions. What is the big deal? It's over data lines, no one at the bank should have to BE THERE to post deposits. The payroll runs all at the same time, we offered direct deposit as a convenience to our employees. Our bank has offered this debit card scenario, but there's a charge for that, and Bank/America seems to think we should cover that as a benefit to our ees. DD is a pretty low threshhold at which to toss or not hire a good employee.
  • I didn't mean to imply that someone couldn't use any bank they wanted. They certainly can. Just that the bank that has our company account is willing to bend over backwards to help our employees. This has NOT been a big issue for us, we've never lost a good candidate or employee over it.

    The biggest drawback for us is that people don't pick up their paystubs, which makes distributing the company newsletter and other information more difficult.

    The only reason I joined this discussion is because someone said it could not be mandatory.
  • We do charge for DD. We are a non-profit with a high turnover in our after school kare staff. We allow admin staff to set up DD after completing their 90 day intro period and childcare staff after 1 year. Bear in mind, average employment is only 9-10 months.

    We charge a one-time set-up fee of $2.50 and a $1.00 fee every payday that is taken out of the check.

  • Currently 13 states allow mandatory direct deposit (they are KY, LA, ME, MA, MINN, NC, OH, OK, TN, TX, UT, WA, AND WISC..

    In KY the employee must still get a pay statment and incur no cost for direct deposit.
  • Direct deposit does not require a checking account. You can direct deposit to a savings account.
  • Not as strident as Shadowfax, but I agree. Why do employees HAVE to DD? My employer (county government) tried this because it would leave the payroll department "more time for other duties". Excuse me, they are the payroll department, that is their job.

    I do have DD because most of the time it is an advantage. Occasionally it is not. My 9 departmental employees all DD except one. I would never consider requiring her to DD. In fact, about 95% of the county employees voluntarily DD. How is the remaining 5% going to cost the county a significant amount of money? In addition, I talked to the payroll department who told me that DD doesn't save that much time, it comes with a different set of requirements which also take time.

    I cannot understand why we, as employers, need to control every facet of our employees' lives. Is it a power and control issue? Is it merely to accustom them to taking our "orders"? Is our convenience more important than theirs? Are we just more important, so they must do as they are told? Any advantage put forth by my employer has not materialized according to the payroll department.

    I think we need to spend more time making sure everyone is going their jobs efficiently and effectively and less time controlling our employees banking habits.


  • I have always, always disagreed with checking someone's credit as a condition of employment unless they are directly handling cash. I do not think that it speaks of a person's character. I personally, think it should be illegal. Anyone, regardless of income and individual responsibility, can end up in a serious financial situation due to a major house or car repair (you HAVE to get to work), illness of a family member or themselves, etc.

    Any employer who uses getting a checking account as a condition of employment needs to be careful...it can be considered discrimination in some states due to socioeconomic status, because being poor and not having the money to pay needed bills does not always equal a person who is not responsible. It just means they are poor. Not all bills are unnecessary.

    You could be passing up a ton of great potential employees. I have two that works for me that had to file for bankruptcy and have credit scores with so many pages of collections that don't even read because of joint accounts with a spouse coupled with a nasty divorce. They are both women, and both of them are some of my most reliable and trustworthy employees.
  • Hey out there. We use Paychex and they have the Acess Visa card. It is an option to have money put on these "debit cards" and there is no need to have a bank account. This saves the company money on check printing. There is a great arcticle in last weeks issue of Time Mag. dated 10/13. It talks about the trend to go to these cards. For my company it helps with the hispanic population since many of them are paying big fees to wire money home. They can order an extra card for their families in Mexico and they dont have do anything else. Is there anyone else out there that has a similar option? You can set it up so the first ATM or transaction is free each paycycle. That cuts costs for the employee too.
  • Wow - I tried to stay out of this one for a long time, but I have to throw my two-cents in. Could this situation perhaps be another difference between large companies - over 300 employees and smaller ones? Because, my friends, the cost savings for a smaller company going to mandatory direct deposit is minimal. We've done the study - we offer both to our employees and about 75% take advantage of DD & the rest opt for a manual check. The CFO would like to see mandatory DD, but after I did my study - sorry - the numbers just aren't there to offset poor morale and hire/retention issues. DD is not fail safe, many people distrust the banks - let people believe what they want - it's their money! I will never work for a company that mandates DD - I believe too strongly in the employee's right to manage their own money.
  • I agree w/ mwild31 - it must be the company size that makes the difference. When reviewing the responses, the word that kept coming into my head for an ee touchy-feely - was "options" Provide the employees with options. If it's their idea it doesn't have to be such a hard sell . . .

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