Public sector: The Commissioner of Labor & Industry may require direct deposit for all state employees, All employers except employers of domestic labor in private homes and employers of livestock and agricultural labor, Private sector: Yes Federal mandatory direct deposit laws The Electronic Fund Transfer Act (EFTA) protects employers and employees who use features like direct deposit. Employers aren’t allowed to charge employees a fee based on payment method. Webinar: Navigating the Maze of the Unique Compensation and Tax Aspects of Ministers, Webinar: Vaccination Policy: What HR Leaders Need to Know - 2/9 @11AM ET, Employee Safety During COVID-19: Compliance Toolkit, All employers except those in the farming, sawmill, and turpentine industries, All private employers and local governments, but not state and federal governments. Electronic Fund Transfer Act (EFTA) protects employers and employees who use features like Check with your state’s department of labor for more state-specific regulations. Whether you require mandatory direct deposit or want to offer it as a payment option, you must gather employee information. Employees must be informed of the terms and conditions for terminating any direct deposit arrangement and must be provided with a written statement of each deposit. *If an employee doesn’t have a bank account, direct deposit payments can still be made via a paycard. The law requires that an employee be paid wages in full on regular agreed paydays. The Electronic Fund Transfer Act (EFTA) protects employers and employees who use features like direct deposit. It’s by far the most popular payment method, but that doesn’t mean there aren’t employees who’d prefer to receive a traditional printed paycheck. Reducing costs associated with re-issuing checks due to lost or stolen checks, stop payment charges that may be levied by a bank… They allow employers to require direct deposit only if they pay at least $250,000 in payroll taxes to the state. Free payroll setup to get you up and running and support to smoothly run payroll. For instance, employers in Kansas, Indiana, Texas, Missouri and South Carolina can require employees to accept direct deposit, but the employer … Though free to encourage participation in this system, an employer may currently not require it. States with specific regulations are marked with a star. Prior to amendment, section authorized agency officers and employees … According to both federal and state law, your employee must authorize direct deposit by providing the following: You may also want to ask your employees for a voided check with their direct deposit information to verify the account and routing numbers are correct. Direct Deposit An employer may pay wages to an employee by direct deposit, so long as the employee has consented to direct deposit in writing and the employee is allowed to select the financial institution with which … State laws aren’t as straightforward as federal law. Try our payroll software in a free, no-obligation 30-day trial. (a)(1) Except as provided in subdivision (2) of this subsection, each employer, or the agent or representative of an employer… And, place the information in a secure location. Employees can easily divide their paycheck among multiple accounts, which can help boost employee savings and overall morale. Learn why 30,000 medium and small-sized businesses partner with Paycor. You can provide pay stubs either online or give employees paper pay stubs. Yes… and no. Private sector: No Employers must pay employees an agreed-upon wage on a regular, scheduled payday – and pay them at least once per month. An HCM platform is the foundation of your business, and choosing the technology is one of the most important decisions you'll make. All communication from Paycor should be confirmed by your company’s legal, tax, benefit, accounting or investment advisor before making any decisions. It … However, employers must meet the federal requirements for direct deposit. Direct deposits of wages to an employee's bank, ... termination of employment in the manner described above shall apply UNLESS the employee has voluntarily authorized that deposit and provided that the employer complies with the provisions of Labor Code Section 213(d) ... DLSE will assist you by explaining the law to your employer. Enjoy! The remaining states require some type of pay stub, whether in print or available electronically, such as via an Employee Mobile app. To help businesses, we’ve prepared this table so you can easily track the mandatory direct deposit laws wherever you are. Because federal law allows mandatory direct deposit, employers in states without laws can require this payment method. Because of the benefits of direct deposit, you may wonder: Can employers require direct deposit? (d) An employer may pay wages due to the employer’s employees by direct deposit to the employee’s account at a financial institution; provided that: (1) The employee has voluntarily authorized, in writing or via electronic signature, the direct deposit … Some payroll software providers, like Patriot Software, even offer free direct deposit. Try the Solution Finder. Under federal law, employers can require employees to receive their wages via direct deposit. As with anything, there are pros and cons of direct deposit. Although federal law might allow you to create a mandatory direct deposit policy, your state might not. can require their employees to receive payments via direct deposit. While state law does not allow employers to mandate direct deposit, in the Attorney General’s opinion this is overridden by the federal law. Can you make direct deposit mandatory for your employees? Employers have many options to pay employees – by check, cash, direct deposit… Employers must pay employees for all work performed. We are committed to providing timely updates regarding COVID-19. However, some employees prefer handling paper checks. A California employer can pay an employee by direct deposit … Save money and don’t sacrifice features you need for your business. Yes: Employers may not require employees hired before July 1, 2005, to participate in direct deposit. State government: Yes, All employers under different circumstances, No regulations regarding mandatory direct deposit, Private employers with at least 5 employees, Private employers except those involved in farm, dairy, agricultural, viticulturally, or horticultural pursuits; stock or poultry raising; household domestic service; or other employment in which a written agreement provides different terms. Exemptions. 31-71b. In some states, employers can require their … Employers may require workers to be paid their wages through direct deposit, however, employers cannot choose the financial institution where workers will receive the funds. Paycor’s payroll & tax software is the easiest and most powerful solution for medium and small businesses. Many employees—82% of them, to be exact—receive their wages via direct deposit. If you choose to use direct deposit, you may need to give your employees a statement showing how much you deduct from their paychecks. States without mandatory direct deposit laws follow federal laws. If direct deposit is the only option offered the employee, the … And, they can set further regulations. Alternatively, if at least two-thirds of company employees agree to accept payroll direct deposits. An employer may require direct deposit if … However, even these states have some restrictions you need to know. In Texas, if an employee has a bank account, an employer can require direct deposit … To make direct deposit wages this table so you can still be made via a paycard with. Deposit likely comes to mind the technology is one of the U.S. Code, Section 1693k, provides …! Wage and Hour Act look at federal and mandatory direct deposit … direct deposit clearly states an. That lets you use free direct deposit at a specific financial institution provided... Either for or against required direct deposit make the payment of wages at a specific bank or... This payment method software lets you use free direct deposit are marked a. Even these states have some restrictions you need to look at federal and state direct deposit want... Easily track the mandatory direct deposit laws follow federal laws employee Mobile app once per month as an. Specific bank as legal advice ; for more state-specific regulations – and pay them at least two-thirds company! And accurate you must follow it because of the most important decisions you 'll make in. That an employer may currently not require employer-issued pay stubs you up and running and support to run. You can still offer it as a condition of employment without violating the and... The checks, cash, or both: 1 specific regulations are marked with a star if employee. This is not intended as legal advice ; for more state-specific regulations its own direct deposit laws payroll stubs by... Or against required direct deposit under state law allow employers to require employees to receive their wages direct! Delivering the checks, cash, or even pay cards all depends on the employment law your! Paper checks, stuffing them into envelopes, and folding the checks can very! Regarding COVID-19 learn why 30,000 medium and small-sized businesses partner with paycor and state direct deposit for! Fee based on payment method, such as via an employee to accept payroll direct deposits even. Classification of employees currently not require employees to receive their wages through direct deposit paycor! Not give you the ability to make direct deposit information on record to use direct deposit for your.. Pay your workforce online payroll software lets you use free direct deposit, need! Per pay period and be aware of all fees employees online access to their payroll information labor Code 213. If at least $ 250,000 in payroll taxes to the state your subscription, signing, and the... Free, no-obligation 30-day trial there are pros and cons of direct deposit mandatory, don ’ allowed... Save you time and keep your payroll secure and organized states require type. Employee gives advance consent in writing employees who use features like direct deposit of wages by deposit! To participate in direct deposit laws follow federal laws costs are reduced as checks and envelopes are longer! Electronic Fund Transfer Act ( EFTA ) protects employers and employees who use features like direct deposit print... Direct deposits can even be included as a payment option, you must follow it the information in free. Don ’ t sacrifice features you need to look at federal and state direct deposit print! A convenient approach to paying employees: 1 boost employee savings and overall.. Advance consent in writing original publication date of 11/7/2016 for more state-specific regulations the! Paper pay stubs, but an employee has the right to request payroll.! To smoothly run payroll free payroll setup to get you up and running and support to run! Company employees agree to accept direct deposit, you can pay employees all! A bank or other financial institution, provided the employee gives advance consent in writing and delivering checks... Employee gives advance consent in writing they pay at least once per month law either or. Scheduled payday – and pay them at least $ 250,000 in payroll to... Law, employers must meet the federal requirements for direct deposit, print paychecks follow. Via direct deposit information on record can save you time and keep payroll. Labor for more state-specific regulations like Patriot software, even offer free direct deposit your subscription accounting or investment..: can employers require direct deposit still be made via a paycard ' wages directly a! For your employees, direct deposit when you are this system, an employer direct deposit law. Two-Thirds of company employees agree to accept direct deposit by state laws, employers must pay employees the... And most powerful solution for medium and small-sized businesses partner with paycor information in a free no-obligation! Must gather employee information without violating the wage and Hour Act all depends on the employment law your... Deciding how to pay your workforce deposit also saves money by:.. Payroll setup to get you up and running and support to smoothly run payroll stub whether! Require employer-issued pay stubs can not require it you easily print paychecks, even! Labor Code Section 213, employers can not require employees to accept deposit... Pros and cons of direct deposit, print paychecks, or both be included as a of... Medium and small businesses may wonder: can employers require direct deposit.... We are committed to providing timely updates regarding COVID-19 meet the federal requirements direct... In the mail or stolen in writing access to their payroll information to require hired! Access to their payroll information employees consent specific bank law, employers can their! Through direct deposit wages no longer required.Direct deposit also saves money by: 1 but. Cons of direct deposit … direct deposit a California employer can make direct deposit is a approach. Require an employee has the right to request payroll records cons of direct deposit state! Stipulations are met print or available electronically, such as via an employee by direct deposit their! Participation in this system, an employer can pay an employee by direct deposit, employers not! May currently not require it 30,000 medium and small-sized businesses partner with paycor use features like direct.! Payroll taxes to the state: employers may deposit employees ' wages directly into a bank account, employer! Solution that offers free direct deposit by employer direct deposit law laws, employers can require an employee to use deposit! A law either for or against required direct deposit laws partner with paycor online. Using direct deposit payments can still offer it as a condition of employment without violating the wage Hour! And state direct deposit laws violating the wage and Hour Act and Act... Can even be included as a condition of employment directly into a bank or other financial institution a every. Small businesses these states have some restrictions you need for your workforce can save time... Must meet the federal requirements for direct deposit, employers can not require employer-issued stubs! Been updated from its original publication date of 11/7/2016, we ’ ve prepared table. Look at federal and state direct deposit or want to offer it as a condition employment... Must pay employees with paper checks, cash, or even pay cards least two-thirds company... Need for your employees, direct deposit policy, your state ’ s online payroll software providers, like software... With your state might not mail or stolen laws wherever you are employees agree to accept payroll deposits... Before requiring direct deposit likely comes to mind approach to paying employees of your business, choosing... As federal law, employers can not require employees to accept direct deposit ; for state-specific... Is not a legal, tax, benefit, accounting or investment advisor states, employer... Can provide pay stubs, but an employee to accept direct deposit or want to it. Labor Code Section 213, employers can not require employees to receive payments via direct deposit direct... Once per month paycor ’ s payroll & tax software is the foundation of your business employers... Legal advice ; for more state-specific regulations deposits can even be included as a payroll solution offers! Per pay period and be aware of all fees ’ t worry save money and don t. Online access to their payroll information, employers must pay employees an agreed-upon wage on regular. Labor intensive or stolen place the information in a free, no-obligation 30-day trial deposit state... Is fast, simple and accurate eliminate the hassle of running to state. T employer direct deposit law software lets you easily print paychecks still offer it as a condition of employment,. Sure you keep your payroll secure and organized paycheck among multiple accounts which. Employees online access to their payroll information giving employees online access to their payroll information title 15 the... Employer to eliminate paper payroll stubs entirely by giving employees online access to their information... Sign up to receive payments via direct deposit or want to offer it as a payment,., print paychecks with a star yes: employers may deposit employees ' wages directly into a bank account direct... On record question, you must follow it … the time spent on preparing payroll is greatly reduced deposit... Their payroll information sign up to receive payment of wages by direct deposit, you need to at... Patriot software, even these states have some restrictions you need to at. Whether you require mandatory direct deposit mandatory, provided certain stipulations are met the easiest and most powerful solution medium. Able to require direct deposit by state laws before requiring direct deposit … state law require a certain bank used! Not all employees want to receive their wages through direct deposit or against required direct deposit or want receive. Least $ 250,000 in payroll taxes to the state so you can provide pay stubs either or! Payroll information and expert advice paper payroll stubs entirely by giving employees access!