Direct Deposit Policy
Toshia10
14 Posts
Due to the recent growth of our organization we are considering switching to a direct deposit only payroll system. I have thoroughly researched the laws for our state and am positive that we are able to do this legally. I was wondering if anyone had suggestions on what information I should include in the policy or any sample policies available for direction. I would appreciate any help that you may have for me! Have a GREAT Day!
Comments
Hi Toshia -- it's good that you looked at the laws in each of the states. I know many only allow direct deposit if the employee voluntarily authorizes it and the employee is free to have the funds deposited to a financial institution of his or her choosing. These two restrictions make mandatory direct deposit problematic and under these circumstances, employers are best served by educating employees on the benefits of dd including that funds are immediately available and the employee does not have to go to the bank to deposit a check.
There are a couple of sample policies on HR.BLR.com. One sets out the benefits and it can be found at http://hr.blr.com/hr_docs/16444_54.doc . The other is a policy on participation in dd programs and it is at http://hr.blr.com/hr_docs/16445_54.doc . Hope these help.
Kate
There are many considerations even if your state allows mandatory direct deposit.
Who is eligible for direct deposit--all employees, full-time only? What about temporary employees such as summer interns?
Must employees wait until a probationary period is completed to participate in direct deposit?
What if an employee can't afford a bank account or doesn't live near an ATM or bank?
Don't forget to have a disclaimer that your company is responsible only for correctness of tranmittal of pay information and is not responsible for errors made by an employee's bank.
When we switched to direct deposit, our controller met with our company bank and negotiated free checking accounts for those employees who accept direct deposit from the company. We let employees know about this offer at orientation. This has increased participation, especially because the bank has branches in grocery stores that are open weekends and until 6 pm on weekdays.
However, I learned that a company cannot require employees to have accounts with a specific bank.