Direct Deposit Policy

I had a question(s) for those of you with a policy requiring direct deposit. I am fairly familiar with all of the rules you must comply with when you go about requiring direct deposit (free access to money, guaranteed account, etc.). My question is two fold. First, how was it recieved by the employees? What lessons learned can you share?

Second question. My payroll clerk just returned from a seminar where the instructor stated that you could require a new employee to sign-up for direct deposit. However, if after they begin employment they request to cancel direct deposit and recieve a live check, the company must allow it. I had never heard of this before and it made absolutely no sense. Any help appreciated.


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  • Second question first: If so, that would have to be a state-specific regulation. Ain't so in all states.

    Most employees didn't have a problem with it, but a few die-hards had to be dragged kicking and screaming into it. In the end, we didn't lose any employees over it. We're highly unionized and I was able to put it in all six of our labor agreements over the course of a few years, so that ended any discussion from union employees, and we just adopted the rule for our non-union employees. We did some 'selling', including the savings over hard copy checks, multiple account availability, etc. and we're now close to 100%. Pretty soon I'm going to have to give my boss the ultimatum; sign up or don't work here any more. We'll see how that goes.
  • We are a RI employer. and we can't require direct deposit. We had about 5 employees who simply refused to do dd, but we kept sending them articles on why dd is better all around, and guess what? Now we have 100% participation.
  • We require direct deposit. Some of the older employees objected with the usual complaints you get anytime you start a new policy but that was short lived. It actually went quite smoothly and everyone (even those that objected most) love it.

    Check your state regs to besure you can make it mandatory in your state.

  • Most of our EEs use it and love it. We still have 10 out of 66 who want a check, which we allow.

    Hunter is correct - this is a State specific law.
  • We mandated DD the middle of last year, giving all employees at the time two months to consider and sign up. Several resisted to the very last day, but finally caved. Most resistors claimed invasion of privacy, believe it or not.

    We tell all job applicants DD is mandatory and if they're hired and don't get signed up within two pay periods, employment is terminated. We do employ several minors who typically don't have a bank account set up yet. So we instruct them to set up the checking or savings account with their first paper check and return immediately with the DD authorization. If they don't get it within two pay cycles, they're gone. Only had to do that once, though!

    We chose the two pay cycle time period because some banks refuse to accept payroll on the first submission, choosing to use the first submission as a trial run. So the second EFT is what actually gets the ball rolling.

  • We had a similar problem with the banks early on, but have been able to run a test payroll with just a "ping." This satisfied them the systems could communicate properly so the first live payroll was accepted just fine.
  • State specific. There's an echo. You will find that segments of the workforce, depending on your industry, will not trust it. Some people have never had a checking account. Others cannot get one. Some do not want their spouse knowing anything about their income (believe it or not) and some go directly to the casinos with their paper checks. In this state it can be required.

    My current employer makes it optional. All exempts opt in. About two thirds of the non-exempts opt in.
  • as far as I know you cannot "require" employees to use direct deposit. however, we changed our policy to state that for those employees who do not utilize direct deposit and lose/get stolen paychecks that we will not reissue a duplicate check until the bank confirms they were not cashed/deposited, which could take up to 2 weeks.

    needless to say, everyone is on direct deposit!!!

    good luck!
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