We charge an ACH fee for customers who wish to set up direct deposits to another institution. Can we charge our employees that same fee if they want their payroll directly deposited to an account at another institution?

We are going around and around about this and can't seem to find a law or regulation covering this.

Reg E says this:
1. Payroll. An employer (including a financial institution) may not require its employees to receive their salary by direct deposit to any 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 (designated by the employer) or receiving their salary by another means, such as by check or cash.

Doesn't mention any restriction on charging, but IMO why would you? Last two banks I worked for let us split where our funds could go-no charge.

We don't charge our employees for splitting their direct deposit.

Why would you not let them set it up as an ACH? As Reg E stated you either let them pick the institution or you "may" give them the choice of ACHing to the particular institution or receiving their salary by another means , such as check or cash. It would seem to me that it would be convenience on HR's (payroll) part to allow them to pick their institution. Also, charging for the set up, doesn't seem right to me. Paying to get my pay. But, then I also hate paying ATM fees.

I absolutely agree that the "paying to get my pay" is not right. My challenge is having a Reg or State Labor Law that states that we cannot do it, in order to present that to our management.

This stems from an internal audit recommendation. Management questioning this may not be an issue but I always like to have some "Legal Ammunition" to back me up if it exists.

This is for new hires, as well as, current employees who wish to ACH their payroll to another institution.

What is the benefit? Is the amount that the bank will make be worth the morale of the employees. Yes you may make some $$$ out of this, but in the long run is it really worth it. I would really question my senior mgt. on this one.

By the way, how many people would this affect?

Plus every employee account at another FI is one less to audit

Federal Wages & Hours Law requires that the employee be paid for all hours worked. After that there is a list of allowable deductions for federal,state,local income taxes, voluntary payments for employee benefits,401K/retirement contributions, etc. While the fee for ACH may not be specifically prohibited, it may not be an allowable deduction. It could be construed as not paying the employee for all hours worked. Check your state Wages and Hours Law. It may have similar terms.