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Can't Force Employee to Open Account at Bank
Answer by John Burnett, BOL Guru
Guru Bios
Question: I am trying to find the regulation that states a bank cannot force an employee to open an account with their institution.
Answer: The bank can encourage its employees to open and maintain accounts with the bank. That can serve two purposes. First, it can get employees to share in the customer experience (although most employee accounts have fees waived, and I'd argue that doesn't give the employee the "full picture" of the customer experience). Second, it can provide a convenient place for direct deposit of the employee's pay.
Direct deposit of pay, however, cannot be mandatory unless the employee gets to decide which bank gets the deposit. That provision is found in the Electronic Fund Transfer Act, specifically at 15USC1693k.
No person may--
(1) condition the extension of credit to a consumer on such consumer's repayment by means of preauthorized electronic fund transfers; or
(2) require a consumer to establish an account for receipt of electronic fund transfers with a particular financial institution as a condition of employment or receipt of a government benefit.
It's also found in Reg E, at § 205.10(e)(2).
First published on BankersOnline.com 2/20/06
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