Payroll Direct Deposit Laws
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Understand the various law requirements that must be followed in order to validly pay employees via direct deposit or debit card.The manner in which employees are paid, whether by direct deposit, check, debit card, or otherwise, is inherently an issue of state law. In some states, in order to properly pay an employee via direct deposit or debit card, employers must follow very particular, prescribed rules about which they may not be aware. Employers who fail to follow the required rules may be exposing themselves unnecessarily to significant penalties and damages even if they properly and timely pay their employees. This topic will help employers understand the various state law requirements that must be followed in order to validly pay employees via direct deposit or debit card and thereby minimize the risk of penalties and fines for noncompliance. It will also explain why employers cannot rely solely on their payroll companies and instead must ensure that proper procedures are followed before they pay employees via direct deposit or debit card.
AuthorsGlenn S. Grindlinger, Fox Rothschild LLP
• Only Applicable Law Is the Fair Labor Standards Act
• No Law, Regulation, Opinion Letter, or Other Guidance From the Department of Labor
State Law - Generally, Governs How and in What Manner Employers May Pay Employees via Direct Deposit or Debit Cards
• Some States Have Complex and Detailed Laws That Must Be Followed to the Letter
• Other States Have Laws That Are Not Onerous
• Some States Have No Restrictions or Requirements
• Municipal Laws - Currently None, but Is This Where We Will See New Legislation?
Payroll Companies and Employers
• Cannot Rely Exclusively on Obligation of Payroll Companies
• Employers, Not Payroll Companies, May Be Liable If Not Done Correctly
• Service Agreements May Limit Liability