Can I require an independent contractor to use direct deposit for payment instead of a check?

Yes, you can require an independent contractor, direct employee, or any other type of employee to use direct deposit in place of a check. In fact, in some states, receiving direct deposits can be included as a condition of employment. The Fair Labor Standards Act is the federal act that outlines federal standards for paying employees.

Restrictions on direct deposit

While employers may require employees to accept payments via direct deposit, state laws may allow for some restrictions:

• Employers may not require employees to use a particular bank
• Employers may not assess a fee based upon payment method
• Employees must have access to their pay stubs

Federal recordkeeping

When issuing employee payments via direct deposit or by any other method, employers must follow the recordkeeping recordkeeping standards set by the FLSA.

Helpful links:

This communication is for informational purposes only; it is not legal, tax or accounting advice; and is not an offer to sell, buy or procure insurance.

This post may contain hyperlinks to websites operated by parties other than TriNet. Such hyperlinks are provided for reference only. TriNet does not control such web sites and is not responsible for their content. Inclusion of such hyperlinks on TriNet.com does not necessarily imply any endorsement of the material on such websites or association with their operators.