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Mandatory Direct Deposit in Texas? Texas

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  • Mandatory Direct Deposit in Texas? Texas

    This is something that comes up in conversation Alot these days and I would like to know the LAW!

    1. Can a Texas Employer make it Mandatory for their employees to recieve direct deposit of payroll? If yes, does the employer choose the financial institution or is that up to the employee where they bank?

    OR Does the EmployeE have the option to recieve thier monies via direct deposit or via check?

    Example: Company xyz in Austin wants every employee to recieve payroll via Direct Deposit and if any employees do not have a bank accounts the employees can recieve a paper check.

    2. A new way of direct deposit is what some banks call Payroll cards (which are a debit card that auto loads your direct deposit every pay period. this is for people who may not qualify for a checking account or choose to not have one)
    Would this Payroll card be "included" as direct deposit?
    And IF a employer can make DD mandatory, and IF an employee does not have a bank account, can the employer make it mandatory that the employees payroll go on this Payroll Card?
    Please help where possible. Thank you!

  • #2
    Texas law re direct deposit: Employers may use direct deposit *for employees who maintain accounts at a financial institution*. Employers who desire to pay through direct deposit must (1) notify each affected employee in writing at least 60 days before the date on which the direct deposit system is scheduled to begin and (2) obtain from employees any information required by the financial institutions in which the employees maintain accounts.

    To use a debit card - this has to be approved by the employee in writing.

    The Tx. law allows direct deposit of wages for employees who already have bank accounts. It does not expressly state that an employer may require an employee who does not maintain a bank account to establish one. This ambiguity will probably leave many employers in doubt as to their position regarding direct deposit of wages. The state law does not overcome whatever objections the DOL and the EEOC may have toward such a system under the federal laws they enforce.

    per the TWC & labor code 61.017
    Last edited by Betty3; 02-20-2008, 03:33 PM. Reason: add info
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