What if we can’t set up direct deposit fast enough to deliver final paycheck in time?

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in Compensation and Benefits,Employment Law,Human Resources

Q. A recently terminated employee demanded immediate payment of his wages and asked us to directly deposit the check into his bank account. I know that Minnesota law requires us to pay the wages through the employee’s last day of employment within 24 hours of his demand. While this employee was normally paid through direct deposit, we cannot coordinate a direct deposit within 24 hours. Can we just send the employee a check by mail?

A. You are right that a terminated employee who has made a demand for payment of wages and commissions earned through his last day of employment must be paid within 24 hours. If there is a dispute as to the amount due, an employer is required to pay at least the undisputed amount within 24 hours.

An employer that fails to promptly pay wages or com­­missions that are due may be liable for the unpaid wages and commissions, as well as for a penalty equal to approximately 15 days of pay, plus the employee’s attorneys’ fees and costs.

The question about direct deposit is a good one. The Minnesota statute on prompt payment of wages for terminated employees was written well before direct deposit was an option for employees and employers. Even if your payroll processing system allowed you to do a direct deposit outside of your normal payroll, at many banks, it takes at least 48 hours for a direct deposit to be credited to an employee’s account.

The statute states that unpaid wages and commissions owed to a terminated employee “must be paid at the usual place of payment unless the employee requests that the wages and commissions be sent through the mails.” It’s not clear if direct deposit would be considered the “usual place of payment” or if your workplace (where the employee reported to work) would be considered the “usual place of payment.”

I think under these circumstances, the safest thing to do is to explain the timing to the employee and to give the employee the choice of having the check directly de­­posited on or before a particular date, picking up a copy of the check within 24 hours or receiving the check by mail.

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