Does anyone know where I would find information on a NJ law regarding direct deposit. The Bank is trying to monitor employee accounts for potential suspicious activity, however a majority of the employees have direct deposit into accounts located at other banks. The Bank was told as per NJ law, the Bank cannot require the employees to have direct deposit into this bank. My understanding is that the Bank may not require direct deposit into this bank, however, if direct deposit is offered by this bank, the bank may limit direct deposit to accounts located at this bank only, at the same time giving the employees a choice to either have direct deposit into accounts at this bank, or be issued a paper check which they may deposit at any other institution.

I'm not aware of any New Jersey law that states this.
Section 205.10(e)(2) of Regulation E states the following:

"(e) Compulsory use.
(2) EMPLOYMENT OR GOVERNMENT BENEFIT. No financial institution or other person may require a consumer to establish an account for receipt of electronic fund transfers with a particular institution as a condition of employment or receipt of a government benefit."

Here's the Official Staff Commentary to 205.10(e)(2).

"Paragraph 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."

Thank you!

You're welcome!

We do not permit direct deposit of payroll into our bank because whoever has access to ACH reports has access to priviledged salary information. Just my 2 cents - sorry if I digress.

We do not permit direct deposit of payroll into our bank because whoever has access to ACH reports has access to priviledged salary information. Just my 2 cents - sorry if I digress.

Joser, does that make sense? Wouldn't back office personnel have access to ACH reports showing the ACH credit going to the RDFI? OR is it outside account numbers & no names.....just wondering.

Just got back -- we use an external payroll company so outgoing info to an RDFI is not available to staff. Incoming staff payroll would be - especially in a small bank.