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#882320 - 01/04/08 05:02 PM Employee Accounts
ShannonC Offline
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Joined: Sep 2002
Posts: 123
Kansas
I know I have seen this topic on BOL before, but my searches are not helping me out.

I am looking for some guidelines on employee overdrafts. Currently we treat employee accounts just like any other checking account. We have alot of stuff about personal finances being maintained in a satisfactory manner, but no standards as to what is satisfactory and what is not. We have a couple of employees that overdraw their account a few days after payroll and then don't come out until payday. The have ODP and stay within that limit.

Anyway, I would like to have some guidelines as to how often is allowed and what is excessive. I don't mind them using ODP on a necessary basis, but I think some of them are abusing or using it excessively. I am spending alot of time review employee accounts on those that are always in overdrafts.

Any suggestions?

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Human Resources
#882326 - 01/04/08 05:09 PM Re: Employee Accounts ShannonC
noctrl02 Offline
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Posts: 147
Chicago, IL
If they access a preapproved credit line and stay within their credit limit, there are no issues. However, overdrafts as you indicated would not be tolerated.

First overdraft is a warning. Second overdraft begins disciplinary action. Third overdraft and you are out the door (account closed or termination, depending on associate circumstances).

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#882344 - 01/04/08 05:23 PM Re: Employee Accounts noctrl02
ShannonC Offline
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Joined: Sep 2002
Posts: 123
Kansas
Thanks for your input. I would like to ask for some clarification if you don't mind.

When you say a "preapproved credit line and stay within their limit"....is that referring to the overdraft privilege product we have that is basic for all of our checking accounts?

They are using that amount and staying within their limit.

For example 10 items were presented that were INSF...
Items were paid and the account overdrawn withing the limits.
Account was overdrawn for 11 days in December... 9 days in November....21 days in October. All within the limit amount, just staying OD for a long period of time.

I think this is excessive. They are using the product long term. This is a teller position. I am concerned if a teller is having this kind of money situation, what is my risk.

Thoughts??

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#882368 - 01/04/08 05:39 PM Re: Employee Accounts ShannonC
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 77,247
Galveston, TX
From the FFIEC ODP Guidance:

Institutions providing overdraft protection programs should adopt written policies and procedures adequate to address the credit, operational, and other risks associated with these types of programs. Prudent risk management practices include the establishment of express account eligibility standards and well-defined and properly documented dollar limit decision criteria. Institutions also should monitor these accounts on an ongoing basis and be able to identify consumers who may represent an undue credit risk to the institution. Overdraft protection programs should be administered and adjusted, as needed, to ensure that credit risk remains in line with expectations. This may include, where appropriate, disqualification of a consumer from future overdraft protection.

If you have any customer, employee or not, that abuses the program - it should be terminated based on established bank policies.
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#882746 - 01/07/08 02:04 PM Re: Employee Accounts rlcarey
HappyGilmore Offline
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Pulling people out of the ditc...
We allow an employee to have 2 ODs in a 12-month period, if they have a 3rd, their account is closed and they may not open another account with us for 24 months
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#887415 - 01/14/08 10:18 PM Re: Employee Accounts HappyGilmore
texasbanker123 Offline
Junior Member
Joined: Jan 2008
Posts: 27
i think the way you're doing it is fine. 3 overdrafts = termination??? wow! that's almost ridiculous. our employees are usually refunded the od fees too. we've had branch managers be overdrawn before. if the account is showing signs of abuse, let the appropriate people deal with it, not the employees manager. if a teller's drawer shows up $100 short daily, act accordingly. but if not, leave it alone.
Last edited by texasbanker123; 01/14/08 10:20 PM.
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#898853 - 02/04/08 03:02 AM Re: Employee Accounts texasbanker123
ropingbanker Offline
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Joined: May 2006
Posts: 140
Out West
Employee overdrafts are not something that is looked upon very highly at our institution. We try to set up all employee's with a line of credit whether it be for $500 or more and it is treated as a unsecured line of credit attached to the checking account with a discounted interest rate by 1% less than the rate for the regular account with this product offered. Especially being in a small town people like to talk and it saves alot of embarassment for alot of people. The big thing is to make sure that the repayment is an automatic payment on days when deposits are made even if its only $25 once a month.

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#899170 - 02/04/08 06:27 PM Re: Employee Accounts ropingbanker
I Wear Many Hats Offline
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Posts: 591
the beautiful state of ME
We allow employees (hourly) three free overdrafts in a 6 month period - then after that they are charged. Management employees are charged for all overdrafts unless it's a bank error. If an employee qualifies they can have an overdraft line of credit attached to their checking account - we don't offer overdraft privilege. All employee overdrafts are monitored by the HR department. Out of 200 employees, I maybe have 2 or 3 that have issues. If overdrafts are excessive, we counsel the employee and if they continue we ask them to close their account. In 6 years, we have closed 2 accounts -
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#901710 - 02/07/08 08:40 PM Re: Employee Accounts I Wear Many Hats
mkp122 Offline
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NJ
What about fees for other services such as stop payments, return deposited items, wires, etc? Do you charge for them?

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#901809 - 02/07/08 09:50 PM Re: Employee Accounts mkp122
ropingbanker Offline
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Joined: May 2006
Posts: 140
Out West
Of course we charge for them, you get the perks on the free online banking and the no min. balance on the interest checking account and discounted loan fees and can't forget the most important the FREE checks.

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#902189 - 02/08/08 05:44 PM Re: Employee Accounts ropingbanker
I Wear Many Hats Offline
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I Wear Many Hats
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Posts: 591
the beautiful state of ME
we don't charge fees for stop payments, returned deposited items, etc. Generally we consider the free banking services to be part of their employee benefit package.
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#902380 - 02/08/08 09:35 PM Re: Employee Accounts mkp122
Lil'Belle Offline
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Lil'Belle
Joined: Dec 2006
Posts: 193
Texas, United States
We have free banking for our employees too. We do offer OD Priviledge to our employees WITH the fee. We also have abusers and are trying to slow it down by making sure the employees are aware that any OD account past so many days gets reported to the BOD. No, it doesn't help. I do feel that we need to make changes to our policy.
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#902496 - 02/09/08 05:22 PM Re: Employee Accounts Lil'Belle
Shallis Offline
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Joined: Sep 2005
Posts: 46
Minnesota
We charge employees for overdrawing their acct - and for stop payments. We expect our employees to be good at banking - continued overdraft issues may signal what may come in terms of fraud. If the employee is overdrawn more than 3 times in a month, HR is notified and sits down with the employee and sometimes we take away the checking account access and the employee is paid by paper check.

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#907207 - 02/20/08 02:48 PM Re: Employee Accounts Shallis
Lil'Belle Offline
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Lil'Belle
Joined: Dec 2006
Posts: 193
Texas, United States
I wish we could get management to change our current policy to be strict on our employees. All that is ever said is that it will be reported to the Board. So what?????????? It's not like anything is said to the individual.
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