Can I require my employees to use direct deposit?
The short answer is yes, in some states.
Yes, in some states. In fact, receiving direct deposit can be used as a prerequisite for hiring in many of states provided you comply with the following requirements:
- You don’t require employees to use a specific bank.
- You can’t charge fees based on the payment method.
- Employees must still have access to pay stubs.
States that allow required direct deposit
Indiana, Kansas, Minnesota, Missouri, South Carolina, Texas, Virginia, Washington, and West Virginia allow employers to require direct deposit. However, even these states maintain a mandated exception for employees who don’t have a bank account, allowing them to opt for a traditional paycheck, payroll card, or cash compensation.
Final tips
Although the vast majority of employees and employers in the U.S. prefer direct deposit, some employees will greatly appreciate the option to receive a paycheck instead.
Helpful links
Payroll Direct Deposit Laws – smallbusiness.com
Can I Require Direct Deposit – paycor.com
