Q & A - Required Direct Deposit
Answer by Mary Beth Guard, BOL Guru Guru BIOS
Question: Is there any law against requiring our employees to have their payroll direct deposited? Or do you have to give the option of direct deposit or paper check?
Answer: The Commentary to Regulation E states that "A financial institution (as an employer) may not require its employees to receive their salary by direct deposit to that same institution or to any other particular institution. An employer may require direct deposit of salary by electronic means if employees are allowed to choose the institution that will receive the direct deposit. Alternatively, an employer may give employees the choice of having their salary deposited at a particular institution, or receiving their salary
by check or cash."
As always, check your state's laws to see if there are any pertinent prohibitions or requirements.
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