Most employers are familiar with the benefits of directly depositing employees’ pay in their bank accounts. It saves you time in preparing payroll, costs because you reduce your use of paper, and productivity because workers don’t have to take breaks to go to the bank. For employees, it’s a secure and convenient way to get paid.
Given those all-around benefits, you might ask, could I switch my whole payroll over to direct deposit and require my employees to opt in? The short answer is, that isn’t advisable, and it most likely isn’t legal to require your employees to use direct deposit. In its guidance on the subject, the Texas Workforce Commission (TWC) points out that the U.S. Department of Labor (DOL) has concluded that employees must have the option of receiving payment by cash or check directly from the employer. So how can you get them on board?
Address their concerns
Encouraging employees to use direct deposit by making it easy for them is one way to increase the number of workers who willingly participate. For example, the TWC suggests offering to establish no-cost bank accounts for employees who can demonstrate financial need.
Another way to help employees feel comfortable being paid by direct deposit is to let them know that you’ve set up a system of protections. The TWC recommends having backup methods ready to go in case of a problem. It may ease workers’ concerns to know that if any payment-processing issues arise, they will immediately be paid in an alternate way, like by check or cash.
Even with reassurances, some employees may still be unwilling to provide their bank account information to their employer. In that case, the TWC recommends offering to pay employees with debit cards.
An employee would have to agree in writing prior to receiving his pay via debit card, but much like direct deposit, a debit card offers cost savings to the employer and convenience to the employee—but without requiring the employee to disclose his banking information.
Get it started
If you do decide to implement direct deposit at your workplace, it’s important to keep the following Texas Payday Law requirements in mind:
- You must give employees at least 60 days’ advance written notice that you have adopted a direct deposit wage payment system.
- You must obtain from employees who opt to participate whatever information their banks require to commence direct deposits.
Jacob M. Monty, the managing partner of Monty & Ramirez, LLP, practices at the intersection of immigration and labor law. He can be reached at firstname.lastname@example.org or 281-493-5529.