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  1. #1
    welcomehome is offline Junior Member
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    Exclamation Direct Payment Reversal

    What is the name of your state? Texas

    I am having a conflict with my employer and I am afraid that the employer may reverse a salary payment which he has paid by direct deposit. I talked to the bank and the bank confirmed that any employer can do a reversal at any point of time.
    Can anyone has an idea if this happens what is it that you can do?? Is there a way to stop this reversal. Closing the account does stop the reversal since the bank pays back the employer the amount and sent a letter to collection agency to collect the amount from us. Anyone pls share their valuable ideas & suggestions.
  2. #2
    cbg
    cbg is offline Senior Member
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    While an employer can reverse a direct deposit, and there are sometimes valid reasons why he must do so, he cannot refuse to pay you for time worked.

    IF the employer reverses the direct deposit AND IF this results in your not being paid for time legitimately worked, you can file a complaint with your state's department of labor.

    BTW, there are limitations on what an employer can do with regards to a reversal. They can ONLY reverse the exact amount of the deposit. So, for example, if the amount of the original direct deposit was $500 and your employer only owed you $350, under the law they would still have to reverse the $500 and then pay you another check for $350, either by direct deposit or by live check. But they could not just reach into your account and reverse only the $150 overpayment. It's all or nothing.
    Last edited by cbg; 01-26-2005 at 09:06 AM.
  3. #3
    pattytx is offline Senior Member
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    Your bank is wrong. Under the laws regulating Electronic Funds Transfer (EFT) using the Automated Clearing House, the originator has only 5 banking days from the date of the original deposit to reverse the transfer of funds. If the funds aren't there, the funds aren't there.
  4. #4
    welcomehome is offline Junior Member
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    Exclamation Direct Deposit Reversal

    What u say is right. Some banks do have this 5 days period but I check with Bank of America and it says the employer can do a reversal any time. He just needs to prove that I had violated the contract with him, which he can prove somehow easily.
  5. #5
    pattytx is offline Senior Member
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    It is all banks that accept deposits through the Automated Clearing House, not just "some banks". There is nothing in Federal Regulation E that I could find that allowed any exceptions. However, just withdraw the funds and close the account. Then the employer will have to deal with you directly and your bank account will be out of the picture.
  6. #6
    welcomehome is offline Junior Member
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    Exclamation Direct Deposit Reversal

    Here is the catch,
    I withdrawn all the funds and closed the account but the employer made another deposit which reopened the account again. I checked with the bank and they said if after closing the account the employer tries to do a reversal or withdrawal then bank would deny that saying that the account is closed. But he can still do a direct depsoit for 5 $ and reactivate my closed account and withdraw the previous deposits he had made. I asked the bank if I have a option to close the direct deposit option for my account, they said only the employer can do that.
    So I am worried that the employer can play dirty and reopen my account and withdraw the salary he has already paid. Can anyone sugget me any precaution.????
  7. #7
    pattytx is offline Senior Member
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    I've never heard of a bank "reopening" an account just because an employer originated a direct deposit to the account.

    The only thing I can suggest at this time is to go to your payroll or HR Dept. and fill out the appropriate form to cancel your direct deposit authorization (although this might take one pay period or so). Then, they no longer have your permission to directly deposit anything anywhere.
  8. #8
    cbg
    cbg is offline Senior Member
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    Can I ask a stupid question?

    What is it that makes you feel that your employer is planning to reverse a direct deposit he has made? As I recall, it's a rather rigorous process on his end, involving a certain amount of trouble. It's not like he can just pick up the phone and tell someone, hey, reverse the dd I did to Joe Smith's account.

    You first posted this over a week ago. Wouldn't he have already done so by now if he were planning to? If the deposit had already been made on 1-26, the time frame in which he can legally reverse it has expired. And if it hadn't been made at that time, why would he make the deposit and then reverse it? Why wouldn't he just cancel the deposit in the first place?
  9. #9
    welcomehome is offline Junior Member
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    Exclamation Direct Deposit Reversal

    Thanks for the replies. Here are the answers:
    Yes I had initimated them not to deposit any money in this account and istead gave another account for depsoiting. But I havent filled any direct deposit cancellation forms for the same.
    The reason why they would do this is bcaz I had already applied for H1 transfer and am planning to join another employer in 1-2 months. So in case he comes to know that I am changing my company then he will try to play dirty and would try to reverse the payment. He will make a deposit first to activate the account which is now closed and then reverse the amount later once the account is activated.
    Bank says there is no time span within which he has to do this. Also I cant cancel the direct deposit option. Employer can basically easily reverse the amount claiming that I have breaked the contract and I have repay some expenses which is not true.
  10. #10
    cbg
    cbg is offline Senior Member
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    1.) If the bank is telling you that he can reverse a direct deposit at any time with NO limit, the bank is wrong. There is a limited time frame in which a direct deposit can be reversed under the law. That time frame has expired for any deposit made by the time of your initial post.

    2.) So far you have produced no evidence to support your fear that he is planning to reverse a direct deposit. From where I sit, it seems that you've just made this whole thing up in your own head and are causing some of yoru own problems by trying to counteract something that may never happen. Has he said he is going to do this?
  11. #11
    pattytx is offline Senior Member
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    Well, I still think that Bank of America is wrong regarding the timing of direct deposit reversals; as I mentioned earlier, the limit is 5 banking days after settlement date under federal Regulation E.

    And who is is that is telling you you can't cancel your direct deposit authorization? Does your employer mandate direct deposit in Texas?

    I'm on hold with the Texas Workforce Commission right now to inquire about mandatory direct deposit; the state put something into effect last year, and I'm checking to see if, even if the employer mandates direct deposit, what action they can take against you if you withdraw your authorization. I'll post back if they ever answer the call!
    Last edited by pattytx; 02-02-2005 at 12:16 PM.
  12. #12
    welcomehome is offline Junior Member
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    Direct Deposit Reversal

    Thank you for the prompt replies and support.
  13. #13
    demon_dog is offline Junior Member
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    Direct Deposit Reversal

    My employer erroneously paid employees a day early. They are going out of business and had intended to wait until additional revenue came in before paying employees (this is not a liquidity issue, but instead a potentially shady business move). Our employee handbooks, etc state that payroll is to be paid on the last business day of the month. Seeing as the amounts are legally owed to us as of end of business tomorrow, does my company have the right to reverse my direct deposit?
  14. #14
    TheGeekess is offline Senior Member
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    Quote Originally Posted by demon_dog View Post
    My employer erroneously paid employees a day early. They are going out of business and had intended to wait until additional revenue came in before paying employees (this is not a liquidity issue, but instead a potentially shady business move). Our employee handbooks, etc state that payroll is to be paid on the last business day of the month. Seeing as the amounts are legally owed to us as of end of business tomorrow, does my company have the right to reverse my direct deposit?
    You have posted a question on a thread that was last active in 2005.

    This forum prefers if one does not necropost.

    Please start your own thread for your question. Remember the name of the US state is also needed.

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