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#1802033 - 04/05/13 05:46 PM employee overdrafts (not Reg O)
Trees Offline
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Is there a regulation/best practice or similar wherein banks generally forbid employees to have overdrafts in acounts for which they do not have a OD line of credit? We are not finding anything but someone here appears to think that this is the law of the land.....

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#1802059 - 04/05/13 06:04 PM Re: employee overdrafts (not Reg O) Trees
tdogz Offline
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Our policy prohibits all overdrafts by employees outside of a regular OD Protection program, but I believe they do that as the easiest way to cover all employees without having to specify differences between insiders and non Reg O employees.

This is from 2004, but is an answer to the question about best practices from the Gurus...
http://www.bankersonline.com/operations/guru2004/gurus_op040504b.html

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#1802063 - 04/05/13 06:06 PM Re: employee overdrafts (not Reg O) Trees
Midnight Offline
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Upper Mid West
We have language in a bank policy regarding employee overdrafts and we have language in the employee handbook regarding overdrafts. An inadverdent overdraft is okay so long as it is covered within 1 business day. This is monitored by the auditor and anyone abusing it would be reported to HR and the President.

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#1802071 - 04/05/13 06:08 PM Re: employee overdrafts (not Reg O) Trees
HappyGilmore Offline
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Pulling people out of the ditc...
Similar to Midnight, except we allow 1 per calendar year, if they receive a second they are notified to close their account within 30 days and are not allowed a DDA for 24-months.
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#1802115 - 04/05/13 06:53 PM Re: employee overdrafts (not Reg O) Trees
Trees Offline
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Thanks, everyone. Helpful responses.

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#1802151 - 04/05/13 07:30 PM Re: employee overdrafts (not Reg O) Trees
ahkcompliance Offline
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Joined: Sep 2008
Posts: 2,470
Midwest
Our state law prohibits employee overdrafts. We do not allow employees to participate in the normal OD program. Instead they need to have a transfer set up from another account or an overdraft line of credit. If they get overdrawn and don't have excess funds, it is a violation of state law. We allow this to happen twice. On the 3rd occurance, they eitehr need to close their account or remove their name.

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#1802154 - 04/05/13 07:36 PM Re: employee overdrafts (not Reg O) Trees
rlcarey Online
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Galveston, TX
You might also want to do a simple search on "+employee +overdraft" over the last couple of years as this subject is regularly been beat to death.
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#1805827 - 04/17/13 09:29 PM Re: employee overdrafts (not Reg O) Trees
Southern gal Offline
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Joined: Mar 2008
Posts: 504
TN
An employee OD report is currently provided to board. However there have been no employee accounts overdrawn during the past year. Does this have to be reported to the BOD, or can it be reported at a committee level & noted in committee minutes. Any overdrafts of REG O officers would still be reportable.

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#1806210 - 04/18/13 07:46 PM Re: employee overdrafts (not Reg O) Trees
John Burnett Offline
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Cape Cod
I am not aware of any federal regulatory requirement for a board report of employee overdrafts; there may be a general legal prohibition on such overdraft (and therefore possibly a need for a board report) at the state level, but I don't have knowledge of a particular state with such a requirement.

In my experience, restrictions on employee overdrafts was always a policy matter, managed by HR and audited by our IA department. When an audit exception arose, it was reported to our audit committee, but not to the board.
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#1806282 - 04/18/13 10:01 PM Re: employee overdrafts (not Reg O) Southern gal
Elwood P. Dowd Offline
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Next to Harvey
Aside from overdrafts triggering the application of Reg O, the board should have a lot better things to do.
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#1806348 - 04/19/13 01:20 PM Re: employee overdrafts (not Reg O) Elwood P. Dowd
Southern gal Offline
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Posts: 504
TN
Thanks for the input Ken & John, was hoping you'd respond.

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