Can we make direct deposit mandatory? — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Can we make direct deposit mandatory?

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Q. Can a business require employees to use direct deposit to receive their pay?

A. Under federal law, employers may require employees to be paid by direct deposit, provided employees have a choice about which financial institution the money goes into. The employer may not require that an employee’s paycheck be deposited to any particular institution.

Pennsylvania law is more ambiguous. The relevant statute (7 P.S. § 6121) provides that salary payments may be made by credit to a financial institution designated by the recipient “if the recipient has requested such method of payment in writing.”

The request must be in the form of a written agreement setting forth all of the terms and conditions for the transfer of funds and the methods by which the employee may withdraw the request and terminate the agreement. (7 P.S. § 6122(a))

The Pennsylvania law suggests that the safest course is to suggest, but not mandate, that employees use direct deposit.

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Janet November 10, 2011 at 5:19 pm



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