Can we require employees to use direct deposit? — 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 require employees to use direct deposit?

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in Office Management,Payroll Management

Q. Can a Texas employer require employees to accept payment of wages through an electronic transfer of funds?

A. Most states require employee consent before an em­­ployer may pay wages by electronic funds transfer. Moreover, a few states prohibit employers from denying employment to an applicant or discharging an employee based on the applicant or employee’s refusal to accept payment of wages by electronic funds transfer.

In Texas, employers are permitted to pay wages in one of three ways:

  • In U.S. currency
  • By a written instrument issued by the employer that is negotiable on demand at full face value for U.S. currency
  • By the electronic transfer of funds.   

A worker’s consent as to the method of payment is apparently not required.

As a practical matter, however, if you choose to pay wages only through electronic funds transfer, you should disclose this information to workers and first attempt to secure their consent.

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