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#1893920 - 02/05/14 07:15 PM Mandatory Direct Deposit
HR Banker Offline
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I think I recall reading somewhere that you cannot require your employee to receive their pay by direct deposit to your institution. We are a KY bank and I read that KY law allows you to require direct deposit but what about requiring their account to be at your bank. No one has complained but I'm reviewing our handbook and wondered about the statement "an account must be maintained".

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#1893954 - 02/05/14 07:39 PM Re: Mandatory Direct Deposit HR Banker
Norman Paperman Offline
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You'll find this covered in Regulation E
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#1893965 - 02/05/14 07:49 PM Re: Mandatory Direct Deposit HR Banker
Rocky P Online
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Florida
The cite that Norman was talking about.

Commentary
1005.10(e)(2) Employment or Government Benefit

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.
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#1893976 - 02/05/14 07:57 PM Re: Mandatory Direct Deposit Rocky P
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Thanks.

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#1893988 - 02/05/14 08:00 PM Re: Mandatory Direct Deposit HR Banker
osucpa Offline
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This is always a difficult question. Some employers may say if you are not going to bank here, you don't have a job here (in a round about way). Some employees with just have their payroll funds transferred to a different bank once deposited.

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#1893995 - 02/05/14 08:04 PM Re: Mandatory Direct Deposit osucpa
Kathleen O. Blanchard Offline

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Originally Posted By: osucpa
This is always a difficult question. Some employers may say if you are not going to bank here, you don't have a job here (in a round about way). Some employees with just have their payroll funds transferred to a different bank once deposited.


And Compliance/Audit should be checking for that and making sure that the law is enforced. This belongs in every compliance monitoring program.
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#1894187 - 02/06/14 02:14 PM Re: Mandatory Direct Deposit HR Banker
osucpa Offline
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This would be very low on anyone's audit program. Besides its not like the bank is announcing it.

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#1894191 - 02/06/14 02:18 PM Re: Mandatory Direct Deposit HR Banker
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
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It takes 2 seconds to check. Banks should not intentionally break a law just because a group of customers are employees.
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#1894208 - 02/06/14 02:33 PM Re: Mandatory Direct Deposit osucpa
A_G Offline
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Ask a random sample of new hires.

Audit complete.
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#1900844 - 02/27/14 08:40 PM Re: Mandatory Direct Deposit HR Banker
John Burnett Offline
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John Burnett
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Cape Cod
You may mandate direct deposit, but not that it go to an employer-designated bank. You can require direct deposit to your bank if you provide an option of paying by check.
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