An employer can also require that its employees use a particular financial institution so long as that institution is insured by the United States government.
However, from an employee relations perspective, it would be best to allow your employees to use their own financial institution if you are going to require that they be paid by direct deposit.
Alternatively, an employer may give employees the choice of having their salary deposited at a particular institution (designated by the employer) or receiving their salary by another means, such as by check or cash." Alabama, Georgia, Hawaii, Louisiana, Massachusetts, Mississippi, Nebraska and Ohio have no clear laws restricting direct deposit in any way.
Small business owners in those states are advised to consult with an attorney if they want to require employees to accept direct deposit, especially if any employees are unwilling to accept it.
As before, Michigan employers can encourage employees to accept pay via direct deposit or a payroll debit card by paying employees who do on a different schedule (e.g., weekly or bi-weekly) than employees who opt for another form of payment (e.g., monthly).
Because employee payroll laws vary from state to state, employers with operations in multiple states must be sure to comply with the laws of the particular state in which it is doing business.
Others allow employees to choose between direct deposit and traditional paychecks.Finally, the new law allows employees at any time to request a change between direct deposit or a payroll debit card.The employer may take no longer than 1 pay period to implement the change after receiving the employee’s request and the necessary information.Any election to receive pay via direct deposit or a payroll debit card must be made freely, without intimidation, coercion or fear of discharge or other reprisal.As noted above, Michigan employers still cannot mandate direct deposit for all employees, but the new law moves us closer to that system.In today’s post, Advice and Counsel Team Member John Gupton provides an answer to this common employer question: Yes.