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Mandatory Direct Deposit
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Is it legal to REQUIRE employees to enroll in our direct deposit program? (in the states of Wisconsin, Illinois and Minnesota?) Thank you!
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Mandatory Direct Deposit

posted at 7/15/1999 8:21 PM EDT
Posts: 15
First: 6/21/1999
Last: 3/7/2003
Is it legal to REQUIRE employees to enroll in our direct deposit program? (in the states of Wisconsin, Illinois and Minnesota?)

Thank you!
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Mandatory Direct Deposit

posted at 7/15/1999 9:39 PM EDT
Posts: 833
First: 6/11/1999
Last: 8/23/2001
That will depend on your States' wage and hour rules, or the one's indigenous to the states where you have a presence. Some states demand payment in cash, some by check, some in any form.

Demanding direct deposit may have a disparate effect on your workforce, specifically those who may not have a bank account or transportation to the bank in order to withdraw money.

Check with the wage and hour divisions in the states you named. They can tell you right away. You'll also need a backup plan - if the transmission lines between your company and the banks go down, you may need the facility to print checks immediately instead of having your workforce go without pay - there are requirements for each state also for the timeliness of wages. Those rules would be very handy information - just in case.

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Mandatory Direct Deposit

posted at 7/19/1999 12:48 AM EDT
Posts: 2217
First: 6/16/1999
Last: 12/13/2001
In New York, under the applicable sections of the Labor Law, such a mandatory program would be problematic at best. Even if legal under state wage & hour laws, Jim's concern about a disparate impact claim is a good one, particularly if your workforce is (or becomes) strongly opposed to the practice. Further, assuming a unionized workforce, I would also check applicable collective bargaining agreements. Even if you successfully impose this on an unhappy labor force now, the issue is likely to resurface at the next negotiations.
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