Right of Offset — Terminated Employee

Answered by:

Question:

We have an employee who has been terminated. Her checking account is in an overdraft status. Can we offset her last pay, which is direct deposited into her savings account, to cover the overdrawn checking account? It would use all of her net pay to cover the overdraft.

Answer:

Answer by Andy Zavoina: Your ability to do this will depend largely on your state's labor laws governing final payment of a terminated employee, your account agreement and your state laws for the right to set off. If you are in compliance with those then I would opine you could set off the overdrafts.

Answer:

Answer by John Burnett: If the savings account is in your bank, your position might be better attempting to offset the OD against the savings account.

But check out your state's offset rules, as Dan has suggested.

First published on BankersOnline.com 11/29/04