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Forced Direct Deposit or ATM - no bank

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karriwhel

Member
What is the name of your state (only U.S. law)? Very Small Town Texas
An question arising out of an issue with a family member that works at a government funded nursing home (not sure if that matters). They told all of their employees last week that as of Friday, 2/26 that they either had to enroll in direct deposit or be issued an ATM card for their future pay checks. The ATM card charges fees for every time they use, whether withdrawal, pay for gas at the pump, etc... Family member is very anti-bank since all the issues going about these days with our banking institutions (understandably) & has never had a bank account in her whole life & does not want one. Company is saying that if all employees do not voluntarily enroll in one or the other that they will automatically be issued the ATM bank card even without their signed consent on the paperwork. I work in an area of law myself (I am just an assistant), but this is completely out of my league since it appears to conflict with US regulations. It appears even though this is in the state of Texas & they are notoriously known for being a "non-friendly employee state" should the US law take precedent since she does not currently even have a bank account? I can see if employees already had a bank account established, sure why not (I personally love DD). But, can they seriously charge you to use the money you have already worked for? Keep in mind the issuing bank for these ATMs is the company's bank so perhaps they get some kind of benefit from this? Although I understand the reasoning behind wanting to go paperless; regardless, it just seems wrong to force these people into getting bank accounts (that charge monthly fees) or force them into using an ATM that charges them to use their own money since these poor people are just attempting to hang out to every cent just to may the grocery bill. This is a very small town so banks charge monthly fees at a rate that is not competitive & there are no credit unions of any type, so they are limited in all ways that I see. I found the following info below, but I am unsure if this is valid since the TWC website seems to be down & I cannot check the accuracy. Ideas?

This came out of a HR circular.
"The federal Fair Labor Standards Act (FLSA) says direct deposit is an acceptable method of paying wages only if employees are also given the option of being paid by cash or check. The problem? Most states have their own direct-deposit regulation, and not all comply with FLSA. At least 12 states appear to permit compulsory direct deposit: Kentucky, Louisiana, Maine, Massachusetts, North Carolina, North Dakota, Ohio, South Carolina, Tennessee, Texas, Washington and Wisconsin. But because those state laws provide less protection for employees than the federal FLSA, the federal law takes precedence. Bottom line: Even if your state seems to allow compulsory direct deposit, your organization must comply with FLSA regulations, which say that direct deposit is one option but not the only option. FLSA effectively negates state rules. Most remaining states—other than the 12 mentioned above—either have no state law on the issue or allow payroll direct deposit with employees’ prior consent. Key points: If you offer direct deposit, the employee (not employer) chooses the financial institution. Also, whatever pay system you use, federal law says you can’t charge employees any fees for processing their pay. Another potential land mine: Some organizations offer employees the option of receiving pay via payroll access card. Employers deposit wages directly into an account that employees can access using an ATM-like card. Those cards can comply with FLSA direct-deposit requirements only if employees are not charged fees."
 


pattytx

Senior Member
Your "HR circular" is nuts. The FLSA does not address the method of payment of wages. At all. Ever. This issue is left SOLELY to the states, and Texas is one of the states that has provided for mandatory direct deposit (or alternatively, a pay card) with certain limitations.

For some reason, the TWC site is running REALLY slow today, but you can drill down to "Texas Labor Laws" and read more.
http://www.twc.state.tx.us/customers/bemp/bempsub5.html

My reference resource says that Texas has no provision regarding the employee not incurring additional fees for direct deposit; however my resource is also about three years old and it doesn't address debit cards for Texas workers, although the TWC may have addressed it by now.
 

pattytx

Senior Member
I just noticed the reference to "government-funded" (it's really hard to concentrate on posts which have huge block o' texts such as yours).

Which "government"? There's a reason I'm asking.
 

karriwhel

Member
US Government - Medicare/Medicaid. Not a state ran.

What do you mean by "(it's really hard to concentrate on posts which have huge block o' texts such as yours)" I am not meaning that rude in any manner, just not sure what you mean by it?

Thanks for your reply!
 

pattytx

Senior Member
Some of us with older eyes who look at a monitor 8 hours a day, big blocks of text start running together after a while. Paragraphs and white space make the posts easier to read and easier to focus on what the question is. Plus the fact that we're all volunteers here and have to fit this into a few minutes here and there when we can. The longer a post takes to comprehend, the less likely there will be a response.

Make sense? :)
 

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