Thread Options
|
#213936 - 07/21/04 07:22 PM
Forcing Employees to bank at your institution
|
Anonymous
Unregistered
|
Hi there,
I've got a good one. My bank is forcing employees to bank with them. I, as Compliance Officer, felt a duty to tell them that you can't force people to bank at the institution they work at. Employees are allowed to direct deposit their pay into any account they wish. I know, I've read commentary on this before and it escapes me. Does anyone know which reg this is mentioned in? Reg E??? Has anyone had to deal with this before? This is a hot issue here and I really don't want them misinforming new employees.
|
Return to Top
|
|
|
|
#213937 - 07/21/04 07:23 PM
Re: Forcing Employees to bank at your institution
|
10K Club
Joined: Sep 2002
Posts: 13,965
TN
|
Reg E states that you can't base someone's employment on whether or not they have an account at your institution. I had the HR Policy changed when I started here, but it hasn't been an issue.
_________________________
My Opinions Only
|
Return to Top
|
|
|
|
#213939 - 07/21/04 07:36 PM
Re: Forcing Employees to bank at your institution
|
Anonymous
Unregistered
|
That's a spin. Our bank seriously discourages employees and family members to have accounts here.
|
Return to Top
|
|
|
|
#213940 - 07/21/04 07:45 PM
Re: Forcing Employees to bank at your institution
|
Anonymous
Unregistered
|
Thanks for the site. That's exactly the one I was referring to. Boy, you all are so quick. Yes, they are trying to tell employees they HAVE to direct deposit here and only here. It's very frustrating and has become an emotional battle. Noone wants to hear that they technically can't force an employee.
|
Return to Top
|
|
|
|
#213941 - 07/21/04 08:53 PM
Re: Forcing Employees to bank at your institution
|
10K Club
Joined: Nov 2003
Posts: 12,846
|
Quote:
Our bank seriously discourages employees and family members to have accounts here.
why would you do that?
|
Return to Top
|
|
|
|
#213943 - 07/21/04 09:36 PM
Re: Forcing Employees to bank at your institution
|
Platinum Poster
Joined: Jun 2003
Posts: 938
Do you know the way to ...
|
If I remember correctly, you can require them to receive their pay through direct deposit, but you can't specify an institution where the account has to be held.
_________________________
Just a lowly 1st Year Law Student ("1L"), so don't take anything I say seriously!
|
Return to Top
|
|
|
|
#213944 - 07/21/04 09:50 PM
Re: Forcing Employees to bank at your institution
|
100 Club
Joined: Apr 2003
Posts: 180
Omaha, NE
|
I read the commentary a bit differently. Here it is:
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. lternatively, 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.
I read it to say you cannot require a specific institution to which their paycheck (or as the reg states an electronic fund transfer) will be directly deposited. If you pay in check anyway or give them the choice to receive their pay in cash or check, Reg E doesn't seem to prevent the requirement that they bank at your bank. This may be restricted by state law, but I don't see it specifically prevented in Reg E. Anyone see it my way?
_________________________
The opinions I express are my own and not the opinions of my employer.
|
Return to Top
|
|
|
|
#213945 - 07/21/04 09:55 PM
Re: Forcing Employees to bank at your institution
|
10K Club
Joined: Nov 2003
Posts: 12,846
|
Quote:
If you pay in check anyway or give them the choice to receive their pay in cash or check, Reg E doesn't seem to prevent the requirement that they bank at your bank. This may be restricted by state law, but I don't see it specifically prevented in Reg E. Anyone see it my way?
What, are you going to tell them that even though you pay them by check they HAVE to deposit it at your bank?
Let's define our terms here - I assume the discussion is about how employees are paid, because there is no legal or practical way you can tell employees that they cannot have an account at another institution.
|
Return to Top
|
|
|
|
#213946 - 07/21/04 10:06 PM
Re: Forcing Employees to bank at your institution
|
100 Club
Joined: Apr 2003
Posts: 180
Omaha, NE
|
Before I posted (and considered not posting), I considered that from a practical standpoint this would be impossible. I also considered it to be illegal from the standpoint of the freedom to contract. I wanted to see if others had the same thoughts.
_________________________
The opinions I express are my own and not the opinions of my employer.
|
Return to Top
|
|
|
|
#213947 - 07/21/04 10:19 PM
Re: Forcing Employees to bank at your institution
|
10K Club
Joined: Nov 2003
Posts: 12,846
|
Quote:
Before I posted (and considered not posting)...
I didn't mean to discourage posting; if I did so, I am sorry. I just couldn't figure out how your suggestion would work.
|
Return to Top
|
|
|
|
#213948 - 07/21/04 10:39 PM
Re: Forcing Employees to bank at your institution
|
100 Club
Joined: Apr 2003
Posts: 180
Omaha, NE
|
You did not, we are going through similar issues at the bank and wanted to post what I thought others might say if I were to state that we cannot force employees to bank here.
_________________________
The opinions I express are my own and not the opinions of my employer.
|
Return to Top
|
|
|
|
#213949 - 07/21/04 10:56 PM
Re: Forcing Employees to bank at your institution
|
Diamond Poster
Joined: Apr 2003
Posts: 1,636
snorkeling in warm, clear wate...
|
We have a policy that allows employees to bank wherever they wish - unless they work in Internal Audit - auditors are not allowed to have accounts here. My rule. I've seen too many fraud cases in 26 years and I like my audit staff a lot. I don't want anyone in the audit area to find a hole in the system and make a bad spur of the moment decision to exploit it rather than report it - if you don't have accounts at the bank, it makes it harder to exploit the holes. We also are in a large metro area with banks on every corner so it poses no hardship - the other benefit is that we get the marketing info and disclosures from the banks we use and get a first hand look at their systems. It's worked out well - no complaints. We can cash checks here, but that's it.
_________________________
CRCM|CAMS
|
Return to Top
|
|
|
|
#213950 - 07/22/04 01:55 PM
Re: Forcing Employees to bank at your institution
|
Power Poster
Joined: Nov 2000
Posts: 2,701
PA
|
Quote:
I read it to say you cannot require a specific institution to which their paycheck (or as the reg states an electronic fund transfer) will be directly deposited. If you pay in check anyway or give them the choice to receive their pay in cash or check, Reg E doesn't seem to prevent the requirement that they bank at your bank. This may be restricted by state law, but I don't see it specifically prevented in Reg E. Anyone see it my way?
Tom, I think what the commentary is saying is that an employer CAN offer direct deposit of an employee's pay to an account at a particular institution (and only that institution) as long as the employer also offers the employee the option of receiving his/her pay via check, cash, etc. So, in other words, if all employees must take their pay via direct deposit, you must give them a choice of financial institutions in which to have it deposited. If you give them a choice of either direct deposit or some other means to receive their pay, you can require a particular FI if they choose direct deposit.
_________________________
Opinions expressed are mine and not necessarily those of my employer.
|
Return to Top
|
|
|
|
#213952 - 07/23/04 03:01 PM
Re: Forcing Employees to bank at your institution
|
Anonymous
Unregistered
|
After meeting with upper management yesterday, that's exactly what they decided to do. They decided they would direct deposit only into an account with them, or give the employee the option of getting cash and only cash. I'm kind of disappointed in this tactic because it just doesn't seem reasonable. I'm of the mind set that everyone has the right to bank where they wish and they are making it inconvienent to bank elsewhere. Oh well, I guess I'll have to live with this one. I just don't think it's a big deal to have employees bank with other institutions if they wish.
|
Return to Top
|
|
|
|
#213956 - 07/23/04 06:12 PM
Re: Forcing Employees to bank at your institution
|
Anonymous
Unregistered
|
That's exactly what I'm doing. My bank doesn't offer online bill pay and I absolutely love my online bill paying feature. Wouldn't trade it for the world. Thanks for all your help.
|
Return to Top
|
|
|
|
#213957 - 07/23/04 07:09 PM
Re: Forcing Employees to bank at your institution
|
Power Poster
Joined: Apr 2001
Posts: 4,828
Between the lines
|
Just my 2¢ ---- sounds like a knee-jerk reaction to me. Do they think that they are going to stop undesirable employees from doing things that they should not do, like maybe kiting. Whatever the reason, if they are trying to control behavior with this rule, I vote that they deal with the problem employee(s) instead.
If you are doing direct deposit, it's just as easy to go to another bank as it is to go to your own.
_________________________
NOLA is my Beach!
|
Return to Top
|
|
|
|
#213958 - 07/23/04 07:47 PM
Re: Forcing Employees to bank at your institution
|
Anonymous
Unregistered
|
When I read the requirements I believe it to be that they can require the direct deposit be in thier institution if they give you the option of receiving your check by cash or check. I think they have to give you an option of cash or check. They think they can just say we'll give you cash. I think this is so unreasonable.
|
Return to Top
|
|
|
|
#213959 - 07/23/04 08:05 PM
Re: Forcing Employees to bank at your institution
|
10K Club
Joined: Oct 2000
Posts: 40,086
Cape Cod
|
They can require direct deposit to a specific bank (their own in this case) if they offer either payment by check or payment in cash. They don't have to offer both.
The intent of the rule is to prevent an employer from requiring EFT direct deposit to a specific bank as a condition of employment.
_________________________
John S. Burnett BankersOnline.com Fighting for Compliance since 1976 Bankers' Threads User #8
|
Return to Top
|
|
|
|
#213960 - 07/23/04 11:36 PM
Re: Forcing Employees to bank at your institution
|
Anonymous
Unregistered
|
Would this bank want it known that a significant number of its employees are being paid regularly in cash? Wouldn't this constitute an employee safety issue? What would the potential liability be?
|
Return to Top
|
|
|
|
#213961 - 07/26/04 02:05 PM
Re: Forcing Employees to bank at your institution
|
Anonymous
Unregistered
|
I totally agree about this being a saftey issue as well. I'm also concerned regarding Privacy. I had to go to a teller this morning and take out my pay for two weeks. Now, she knows how much I make. It's very frustrating when people aren't flexible.
|
Return to Top
|
|
|
|
#213962 - 07/30/04 08:47 PM
Re: Forcing Employees to bank at your institution
|
Anonymous
Unregistered
|
If a bank wants its employees to bank with them then why not offer incentives. My bank gives its employees free checks and free checking as well as other incentives for doing business with the bank. Instead of forcing the employees hand and making for an unhappy environment reward them for doing business with their bank.
|
Return to Top
|
|
|
|
#213963 - 07/30/04 09:00 PM
Re: Forcing Employees to bank at your institution
|
10K Club
Joined: Jun 2004
Posts: 20,015
Pulling people out of the ditc...
|
most employee accounts are tagged as "do not close" so what would stop an employee from writing a check for the amoutn of their check ech pay period and depositing it in a bank of their choice? Nothing says you must bank where you work, they are just saying here is how you get paid. Would a ZBA not work?
_________________________
Providing alternative truths since the invention of time
|
Return to Top
|
|
|
|
#213964 - 07/30/04 09:16 PM
Re: Forcing Employees to bank at your institution
|
Anonymous
Unregistered
|
We don't want employee accounts! We are located in a large metropolitan area and have arrangements with two major correspondent banks to offer free accounts. (The employee can choose to avail themselves of the free account offer or we will direct deposit to any other bank of their choice.) By doing so you eliminate: increased teller lines due to employee transactions, payroll information leakage, water cooler gossip about an employee's spending habits, political or charitable contributions, medical bills etc. You also eliminate the messy situation of handling employee overdrafts. Eliminating employee accounts also closes one avenue of fraud and reduces the internal audit/supervisory reviews that are necessary with such accounts.
|
Return to Top
|
|
|
|
#213965 - 08/03/04 12:20 AM
Re: Forcing Employees to bank at your institution
|
Power Poster
Joined: Aug 2002
Posts: 7,353
Anchorage Alaska
|
I must have lost my mind some time today because I find this thread confusing as all get out  First of all, cash? Or are they paying in check form to those not being paid electronically. They're not really going to mail out or deliver large envelopes of cash are they? Someone has to be speaking tongue in cheek here. And requiring direct deposit from the bank when it offers this payroll option to only be deposited into your own bank...well heck it makes sense. Encourage your employees to enjoy the convenience of direct deposit and have their accounts here....ummm that's a no brainer. What bank wants their employees writing checks out in the community from another bank? In my mind, if you won't bank with your employer you're a great advertisement for why no one should bank with them. If they're so bad you won't bank there why should a client? As to the last post, again, you want senior staff writing checks on Wells Fargo stationary while working for you? I sure don't. I'm dang proud of where I work and I bank here because of this. We have procedures in place that protect us from our spending habits, etc. being gossiped about. Rules about overdrafts, rules about sharing payroll information, etc. Every bank I've worked at has. Most even white out (electronically) the deposit amount on employee deposits for this protection. Perhaps some of the banks responding are full of crooks  But we actually have some rather good clients who are also bank staff. We find the crook a rare commodity and assume we WANT our staff's accounts, both DDA and lending. Why not? You're passing up on a huge amount of business by not wanting your staff to bank with you. You're also tellling the community through their check writing on OTHER bank's stationary, that they've found a "better" bank than yours to deal with. I'm glad we don't force our staff to issue this message in our community!
_________________________
Dawn Coursey VP/CRA Queen
CRA Rating is in...Oh who cares...I'm home with the baby.
|
Return to Top
|
|
|
|
#213966 - 08/03/04 01:26 PM
Re: Forcing Employees to bank at your institution
|
10K Club
Joined: Nov 2003
Posts: 12,846
|
Quote:
And requiring direct deposit from the bank when it offers this payroll option to only be deposited into your own bank...well heck it makes sense.
Dawnie, I agree with you about the message that it sends to encourage your employees to bank elsewhere, but I'm not sure you picked up on the fact that it is a Reg E violation to require them to accept direct deposit to any one institution (including your own).
|
Return to Top
|
|
|
|
#213967 - 08/03/04 07:34 PM
Re: Forcing Employees to bank at your institution
|
Platinum Poster
Joined: Jan 2004
Posts: 555
Louisiana
|
Dawnie, I agree with you about the image and having the controls in place to protect against crooks, gossips, etc. However, there are many reasons to not bank where you work. As someone who banks elswhere, I have several.
First, as the auditor, I review employee accounts. I would have to have someone else review mine, if it was here. Second, we have only 2 branches and one ATM in town (not near my house). The other bank has ATMs on nearly every street corner. They also have free checking, online banking, and bill pay. We don't have bill pay. Third, I have known a few people who were fired for excessive ODs. I haven't bounced a check since college, but I'd hate to take that chance if I was running close. I could continue, but I think I've made my point.
Don't get me wrong, I love where I work and I would not work at the bank who holds my money for me. Sure, I'm embarrassed when I'm wearing my bank logo shirt and I whip out the other bank's check card, but it is short lived.
_________________________
You gain education by reading the fine print. You gain experience by not.
|
Return to Top
|
|
|
|
#213968 - 08/03/04 08:16 PM
Re: Forcing Employees to bank at your institution
|
Anonymous
Unregistered
|
As the anti-employee account person, thanks for more clearly outlining the reasons for this stance. Being a smaller bank in one of the largest cities in the U.S., we are not trying to compete with the Chase/Bank One's and Citibank's of the world in the number of ATM's, bill pay etc. If an employee wants a free account we've made arrangments for them to get everything free plus 1000's of free ATM's. If someone really wants to bank with us they can - but the account is not free and they must keep the required minimum balance.
In a city our size, the image issue raised by Dawn is a not a problem - maybe it is in a smaller town. Of course all banks have controls and policies concerning employee accounts and confidentiality - but there will also be lapses and violations. In my 20 years of bank auditing and examining I've seen several frauds where using an employee account aided in committing fraud. (And in each case the bank had a clean audit/control opinion from a major accounting firm.)
In encouraging employees to bank elsewere, we viewed the positives to the employee and the elimination of potential headaches as a win-win situation.
|
Return to Top
|
|
|
|
#213969 - 08/05/04 11:49 AM
Re: Forcing Employees to bank at your institution
|
Anonymous
Unregistered
|
A U.K. perspective, for what it’s worth. When I joined my bank in 1977 (sic) staff were obliged to have their current (= ‘checking’ I imagine) account with the bank so as to enable it to track their financial affairs, in case a staff member was ‘up to no good’. Also overdrafts were strictly forbidden. In the eighties this was relaxed and by the nineties we were allowed to conduct our financial affairs as any other member of the public. Recently, my bank set up a special department whose aim is to encourage staff to put as much of their personal business through the bank as possible, offering special terms on certain ‘products’ -that are not available to ‘ordinary’ customers- to do so.
|
Return to Top
|
|
|
|
#213971 - 08/07/04 10:29 AM
Re: Forcing Employees to bank at your institution
|
Anonymous
Unregistered
|
We are required to have an employee account for our pay to be deposited however, we can bank at any institution we want. I know at our bank we as employees get everything free so why would I want to bank anywhere that I wont get everything free.
|
Return to Top
|
|
|
|
#213972 - 08/07/04 12:38 PM
Re: Forcing Employees to bank at your institution
|
10K Club
Joined: Oct 2000
Posts: 40,086
Cape Cod
|
Let's wrap this up with a bow by restating the Reg. E rule: As an employer, the bank may not condition employment upon the employee's agreement to receive pay by EFT deposit to an employer-designated financial institution. That means: - The bank may not require the employee to receive pay via EFT deposit to an account at the employer.
- The bank may not require the employee to receive pay via EFT deposit at any other employer-designated financial institution.
- The bank may require EFT deposit if it permits the employee to select the receiving financial institution.
- The bank may require that any EFT deposit be to an employer-selected institution (including itself) if the bank permits the employee to receive pay by some means other than EFT deposit (such as check or cash).
There is nothing in the Reg. E rule that prevents an employer from requiring its employees to bank with it. But I cannot imagine how such a policy would be enforceable.
_________________________
John S. Burnett BankersOnline.com Fighting for Compliance since 1976 Bankers' Threads User #8
|
Return to Top
|
|
|
|
|
|