Employee Paychecks and Direct Deposit

June 21, 2017 • April Mabry

question and answer

Q: Can a district require direct deposit of employee paychecks?

A: Districts may not require employee paychecks be deposited directly into a bank account. Although direct deposit is an acceptable method of payment and the most popular means of delivering pay, employees must be given a choice to have their pay directly deposited into a bank of the employee’s choice or to be paid with some other negotiable instrument, such as a check.

Some employers use payroll or debit cards to pay employees who do not have bank accounts. This method is another option for distributing payroll as long as employees also have the choice of receiving a check. Districts that provide payroll or debit cards must ensure employees are not subjected to fees that would effectively reduce their pay. Any fees charged by the bank or financial institution should be paid by the employer.

Whatever method is used, individuals cannot be required to establish an account with a particular financial institution.

Tagged: Compensation, "Payday law"