Making Direct Deposit Mandatory?????

We are a staffing firm, 100 staff employees, 30 years in business. Several years ago we got into direct deposit and 94 employees now receive their pay through direct deposit. We would like to make it mandatory. I know of no law on the books, federal or state (Wisconsin) which prohibits this. We would, of course, do it tactfully. Anyone know of any law/statute we would be violating? Has anyone experienced something similar and can give some hints??


  • 9 Comments sorted by Votes Date Added
  • Most states have laws prohibiting mandated direct deposit. I'd check your state statutes.

    Margaret Morford
  • Doesn't IBM in all of its locations require direct deposit??
    I know of no other laws preventing this. Will be interested in the discussion on this topic.

  • I thought I also heard that the Federal Government. .or at least the Parks department had made direct deposit mandatory as well.
  • Having some experience with this same type of thing, I found that going to the 6 employees and talking with them about DD is much more productive than mandating the issue. Find out what issues/misconceptions they have. Domestic issues frequently prevent employees from DD for obvious reasons, but you should find out what the reluctance is. Building consensus to phase DD over a 3,6,9 mo period gets you to your objective and enables the employees to feel more comfortable. Incent the employees to do this by negotiating with the bank for free or reduced fee checking for 12 mos; or something like that. I've seen a couple of union organizing efforts that precipitated by this DD issue. I've not found that mandating it is worthwhile. You push the issue and addt'l employee relations issues are likely to arise.
  • We had this issue come up when we acquired a company in Illinois. I spoke with counsel in Illinois, and to the state Department of Labor, and found that Illinois does prohibit a company from mandating direct desposit of pay (or at least it did three years ago when I looked at the issue). I think all ofthe employees agreed to direct deposit so we did not get into enforcement issues. From what I remember, the enforcement process would have been initiated if an employee made a complaint with the state DOL, who would then investigate.

    I agree with the person who suggested informational meetings or incentives to try to get employee agreement.
  • I hate to be a broken record, but you need to check your state laws. I know that Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Idaho, Illinois, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Montana, New Hampshire, New Jersey, New Mexico, Oregon, Pennsylvania, Rhode Island and South Carolina have laws prohibiting mandated direct deposit. Indiana will allow it for new employees , but not for existing. Hope that helps all of you.

    Margaret Morford
  • I am from South Carolina and in our office we ask/and strongly encourage that employees sign up for direct deposit, but if they refuse or, for some reason, they do not qualify for direct deposit, there is nothing "mandatory" that we can do as they must be paid. We don't have very many people who get "live" checks as this is something that most people gladly sign up for. Again, state laws vary, but I can't see any state that would not mandate that employees would get paid whether or not they sign up for direct deposit.
  • I contacted the Okla. DOL about this issue and was informed that the Attorney General of Okla. has issued a ruling that direct deposit could not be mandated to current employees, but could be a "condition of employment" for new employees. We are in the process of enrolling all our staff. A key factor is that our bank is giving free checking and will open accounts for those who otherwise couldn't qualify. We've had a few happy about being able to get an account, and others who were very resistant. At this writing, 95% of our 225 are signed up.
  • I was at a labor law seminar and one suggestion to "encourage" employees to sign up for direct deposit was to institute a new policy for distribution of checks. This new policy stated that all payroll checks/stubs would be distributed by mailing to the current address on file. They would not allow anyone to drop by the payroll office to pick up a check. This saved that payroll department time from interruptions and most people decided to try the direct deposit.
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