Debit Cards/Direct Deposit

qsausagelm

Can a company require that EE’s accept either debit cards or direct deposit as the only means of payment for their wages and salaries? (No actual paycheck) I didn't get any response to this question when it was posted in the "Wage & Hour” and boy howdy do I need some learned help.

Thanks

awilliams

This is an area governed by state law. I'll check into Texas law on the issue of direct deposit and see what I turn up.

Anne Williams
Attorney Editor
M. Lee Smith Publishers, LLC

SMace

Looks to me like you can require it. Note at the bottom it tells what you have to do if you do require it.

An employer must pay wages by the following means:

¨ Delivering them to the employee at the employee’s regular place of employment during regular employment hours.

¨ Delivering them to the employee at a time and place agreed on by the employer and employee.

¨ Sending them to the employee by registered mail, to be received by the employee not later than the regular payday.

¨ Delivering them to a person designated by the employee in writing.

¨ Delivering them to the employee by any reasonable means authorized by the employee in writing.

¨ Direct deposit plan.

An employer may pay wages to an employee with an account at a financial institution that qualifies for and utilizes an electronic funds transfer through a direct deposit plan. Employers who pay through a direct deposit plan must do the following:

¨ Notify each affected employee in writing, at least 60 days before the date when the direct deposit payroll system is scheduled to begin, that the employer is adopting a direct deposit payroll system.

¨ Obtain from the employee any information required by the employee’s financial institution that would be necessary to implement the electronic funds transfer.

National Guard

You can give an ee the required notice and you can mandate direct deposit, but, what do you do if they don't provide their bank account and financial institution information?

SMace

The law did not address that. I'd imagine you would give them a grace period and if they don't do it and can't give you a reasonable explanation why, fire them.

qsausagelm

To complicate matters, the majority of these EE's do not have bank accounts. The boss wants to pay them with a stored value debit card or set up accounts in their name at the Company's lead bank.

Crout

Will your company pick up the administrative fee for the cards, or pass that on to the employees?

marc

Call your State department of labor and ask them your question. They probably have an answer for you, or can render an opinion if you formally request one.

From an intuitive perspective, if they agree in writing to your debit card proposal you are probably home free. I anticipate some resistance though, because debit cards are harder to use than cash. And if you are at an ATM, there are limits to the usage, such as $20 increments and some single transaction limits. If the card usage is too much of a hassle, you are going to swim upstream getting approval.

In that case, I would guess you fall back on the other payment possibilites outlined by SMace.

LindaE

We have avoided the problems of employees who don't have accounts and the language barrier by enrolling in a plan here called CashPay. They have customer service and literature in Spanish and English and a toll-free assistance number with bilingual assistance. The only time there is a charge to the employee is if the ee loses his card or makes multiple withdrawals in a certain period of time. The ee is responsible for those fees, but we set everything up initially and give them their first card.
The beauty of this set-up is that checks are no longer lost or stolen, and we had some employees who would hoard their checks and have as many as ten uncashed checks in their possession! That made accounting a mess, and now the daily calls I received about lost, late or stolen checks have stopped. This card can be used like any check card at gas stations, stores, etc. If the ee is terminated or quits, the account belongs to the ee, so we don't have to do anything in that regard.
We can pay our ees in any manner we choose as long as they are paid on time. I am all for mandated direct deposit. I can fax a brochure if anyone wants to see it.
Linda
[email]linda@insulatingservices.com[/email]

Rockie

It depends on your state law as to direct deposit laws. These debit or cash pay cards are becoming very popular with companies who have a large employee base who do not have or are not eligible to have a bank account. If it doesn't cost the employee to use the card, this is perfectly acceptable in most arenas.

Otherwise, if your state law forces you to give a paper check, make sure the employee knows this will be mailed to their home and they are at the mercy of the US Postal Service.

SMace

The section I posted is taken from Texas Wage and Hour Law. I don't think I made that very clear. Sorry.

qsausagelm

Thanks for the help. We've decided (thank goodness) to make direct deposit and debit/stored value cards an optional means to be paid. Fact is, 95% of our EE's have no bank and, therefore, cash their checks at a four-wheeled, armor-plated bank parked outside our plant on paydays.

SMace

Are they charging the ee's to cash the checks outside your plant? If so, how much?

qsausagelm

The mobile bank charges the check casher 1%.