Direct Deposit Problem

Our facility has direct deposit on its salaried employees. Payments are to be made semi- monthly. If the supervisors fail to put funds into accounts as stated. Funds enter the accounts on the 18th instead of the 15th of a given month due to a holiday. Is the company liable for overages in the accounts of its employees?

This is a small business, run in TEXAS. Do any federal laws apply here, if so which ones?

Thank you for any assistance that you can provide in this matter.


  • 7 Comments sorted by Votes Date Added
  • W/o knowing more specifics of your business it's hard to say what, if any fed laws may apply. But, I would say you flat missed a payday, and why wouldn't you step up and make things right because it was obviously the co's error. If you do, then presumably no emp/ee will be interested kn having the wage and hour people take a look. Now, if youhave a policy that if a payday falls on a holiday then you pay the next business day, maybe you have a case, but I don't like it.
  • I agree with Shadowfax. We never missed a payday, but our bank once had an electronic hiccup that caused 6 EEs checks to hit their accounts a day late. With just a little nudging on our part, they took care of any financial penalties associated with the error.

    It is the companies obligation to pay on time, just like it is the EEs obligation to come to work on time. The company probably has disciplinary actions it would take if the EEs were late. I don't know what the Wage and Hour folks would do to discipline the company for being late, but do you want to find out? Just having them come in and poke around would probably cost the company more than if it just stood up and took care of the problems.
  • Generally, if a company is at fault with a payroll, they are obligated to make it good and pay the employee.

    If an employee (not a supervisor) is late getting their time in or doesn't present a time card until after payroll is run, then the company can pay them the next regularly scheduled payday.

    If you don't have a policy such as this, you will have a continuous problem of employees who are late asking for a special paycheck.
  • The company must pay the EE the hours they know or should have known that were worked. It is not OK to hold up the pay for an entire pay period.

    When we are missing a time-card, the supervisor makes their best estimate, and always a bit on the conservative side, so that a paycheck is generated. We make any adjustments on the next check.
  • I am a little confused... I don't know if you mean that the company transmitted the payroll on time, but failed to fund the payroll account or if you mean that you failed to trasmit the payroll in a timely manner that allowed enough time for Automatic Deposits to hit employees' accounts by payday?
    The first situation is terrible. Makes you look as if the company if floating its funds and could get in trouble.
    The second situation may have some consequences. First, in TX you have to post your pay days. It depends upon when you post as your pay day and also what your policy is (stated) for holidays. If a payday is on a holiday, do you state the employee is paid the last day in the office or the first day back in the office.
    I would clarify this and make sure that your payroll cycle is set up each year to cover these dates. (You may have to transmit a day early in order to give time to get the money in accounts by stated payday.) This should be set up about each Oct. for the entire next year and this situation should never happen again.
    To answer your question, if you don't have a policy, I would say yes, I think company should pay all of employees bank fees because employees were told it would be there on 15th. However, if employees are used to it being there on the 14th but the company policy is the 15th and funds are in the accounts by the 15th and employees have overdrafts, you wouldn't owe this.
    E Wart
  • My guess is the payroll person did not realize a holiday effected the direct deposit. I know here depending on holidys, we have to run payroll early because of holidays the DD will hit either a day early or day late but not the day it is supposed to. Unless you specifically state otherwise, you must pay it early, you cannot pay it late. If it was in any way the company's fault you would be responsible for an issues or costs incurred by the employees.
    My $0.02 worth.
    DJ The Balloonman
  • Agree. We had a similar situation where there was a problem with ADP and none of the direct deposits got into the banks on time. Not only did we make good on all overages and over draft charges for all returned checks for employees who could provide proof, we also offered to write letters for any employee who wanted one, accepting responsibility so that employees could show to their creditors.
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