Mandatory Direct Deposit in PA?

[george of]

What is the name of your state (only U.S. law)? PA

Is mandatory direct deposit now legal in PA?

It appears that the PA Code was rewritten in 2010 and the laws that are referenced by those claiming it is illegal were repealed.

It also appears the the court case that is often referenced as allowing mandatory direct deposit wouldn't since it was a case with a collective bargaining agreement that required direct deposit.

I have found lots of websites that have old information but nothing from the past year that references current law.

Can somebody please cite the current applicable laws?

 

[george of]

Looks like the same laws apply but the PA Code is changed. Why would it not be available anymore when searching the state code?

The law require wages be paid "lawful money of the United States or check, except that deductions..."

"Deductions authorized in writing by employes for payment into employe personal savings accounts" are allowed.

Also allowed are "Such other deductions authorized in writing by employes as in the discretion of the Department is proper and in conformity with the intent and purpose of the Wage Payment and Collection Law"

Can an employer make as a condition of employment that a employee authorizes a deduction (transferring money to checking account) to his paycheck that reduces his paycheck to zero?

What if the deduction results in that the wages never become available to the employee due to liens? Are there minimum wage issues then?

 

[eerelations]

I'll answer the liens part of your question as I suspect this is your real issue.

Employers are legally obliged to fork over to their employees at least minimum wages for every hour worked by their employees. Such "forking over" may take many forms, including depositing the at-least-minimum-wage amounts of money into their employees' bank accounts. Once the forking over process is complete (in this instance, when the money lands in the employees' bank accounts), the employers have met their legal obligations. Whatever happens to the money (including shrinkage caused by liens) after it's been forked over is not the employers' responsibility, i.e., they cannot be held legally accountable for this.

 

[george of]

Actually, the real issue is the legality of mandating direct deposit. It is legal some places but not others.

I would think that the legal view would be that wages must be in a medium that the worker can receive legal tender from the employer. Whether an employer in PA is allowed to require an employee to hire a certain type of third party (a bank) at the employee's own expense and risk to receive their wages is the question.

The issue of the possibility of liens making the directly deposited funds inaccessible to the worker is an unintended consequence of the mandate.

 

[tranquility]

Preventing a person to hide from paying his lawful debts is not the purpose of the law, it's just a side benefit.

 

[Captain Picard]

I never give my employer any bank account numbers. Don't trust them.

 

[swalsh411]

I never give my employer any bank account numbers. Don't trust them.

Are you an idiot? They know your account number when you deposit the check into your account. Unless you pay some outrageous fee at a check cashing place in which case you're even more of an idiot.

 

[george of]

Preventing a person to hide from paying his lawful debts is not the purpose of the law, it's just a side benefit.

Now, we may be closer to the answer to my question about the legality of mandating direct deposit.

Which law are you referring to?

 

[tranquility]

The law which allows private parties to make contracts.

 

[ecmst12]

Here is the way the law, in general, works:

If you cannot find any evidence of a specific law existing that makes mandatory direct deposit ILLEGAL, then it is legal. The law, generally, only tells you what you are NOT allowed to do, rather than what you ARE allowed to do, because the former group is much smaller.

 

[eerelations]

So if there isn't any law in PA specifically prohibiting mandatory DD (and it appears that there isn't), then mandatory DD is legal in PA. And if it's legal then that's the way your employer pays you. Period.

And if the liens on your bank account remove your DD'd pay before you can get at it, that's not your employer's responsibility.

 

[cbg]

Here is the way the law, in general, works:

If you cannot find any evidence of a specific law existing that makes mandatory direct deposit ILLEGAL, then it is legal. The law, generally, only tells you what you are NOT allowed to do, rather than what you ARE allowed to do, because the former group is much smaller.

And this is exactly how this precise issue played out in my state. I don't recall the details of the case but the final judgement of the court was, since we can't find a law making mandatory direct deposit illegal, it must be legal. And it's been considered legal in my state ever since.

 

[george of]

So if there isn't any law in PA specifically prohibiting mandatory DD (and it appears that there isn't), then mandatory DD is legal in PA. And if it's legal then that's the way your employer pays you. Period.

And if the liens on your bank account remove your DD'd pay before you can get at it, that's not your employer's responsibility.

PA law specifically requires that wages be paid in "lawful money of the United States or check" after the allowed deductions are deducted. Deductions to deposit into savings accounts are allowable with permission of employees by DOL rules. While I recognize that checking and savings accounts are different, I assume (a dangerous thing to do, but probably safe here) that deductions to deposit into checking accounts would also be allowed with employee permission. Or maybe checking and savings accounts are both legally considered savings accounts.

But I think the issue is whether a company dictating that no employee be paid in "lawful money of the United States or check" by requiring deductions of 100% of their wages is legal.

To require reducing the paycheck to zero, I would think that for the practice to be legal it would need a determination that the practice at "discretion of the Department is proper and in conformity with the intent and purpose of the Wage Payment and Collection Law". I have looked for and not found any such determination. If the employee willingly does it, I see no conflict with with the intent that wages be payed in lawful money or check, but if the employee is not willing to not be payed in lawful money or check, I would think the practice would be considered illegal.

About the liens on my bank account, there are none, but at least one of my workers does and is living paycheck by paycheck. If the company were to require wages to be payed into a seize-able account, he would have nothing. It would be like 100% garnishment (after taxes). But that is a different issue.

On the issue, various websites list mandatory direct deposit to be either legal (some based on the lawsuit with the collective bargaining agreement) or illegal (some based on lawful money or check requirement). There appears to be a significant amount of confusion on the issue. When I made the initial post, I was assuming (likely wrongly) that the laws had been changed.

Can anyone cite a determination by the DOL? Or would absence of a determination make the practice legal or illegal?

 

[eerelations]

While the DOL has more than a few things to say about wage garnishment, the DOL has nothing to say about liens. That's because garnishments happen before an employee receives his/her pay, and liens happen after.

As you've been told previously, employers are not legally responsible for what happens to their employees' pay after they've paid said employees. I for one am tired of telling you this over and over again and will not tell you anymore. If you still can't understand what we're telling you, re-read our posts until you get it.

 

[george of]

Thank you for most of your replies, even the ones making assumptions like me having a judgment and a lien against me

The personal attack by one senior poster against another was kind of uncalled for in a forum designed to assist people, but it is a free forum where volunteers and trolls can post whatever, so I can't complain, but do comment.

A quick conclusion from what I have discovered from a search for info over a couple days on the issue of the legality of mandating direct deposit is that it should be legal in the state of Pennsylvania as long as the Department of Labor considers it a valid allowable deduction. I have not seen any requirement that such determination actually be made or published, so that absent from state action against it, it should be allowed.

An argument against the legality of mandatory direct deposit could be:
- wages minus allowed deductions are required by law to be paid in lawful money or check
- an EFT is not lawful money or check
- DOL regulations list allowed deductions
- DOL regulations allow for the DOL to allow additional deductions that comply with the law
- the DOL has not made a determination that mandatory deduction for direct deposit complies with the law
- DOL regulations also prohibit deductions below minimum wage for expenses or charges required by employer in connection with employee's performance.
- private agreements cannot overrule the law as a specific provision of the state wage law

An argument for the legality of mandatory direct deposit could be:
- state law allows for deductions to savings accounts with employee permission
- checking accounts are similar to savings accounts
- there is no state law prohibiting an employer from requiring an employee to authorize a specific deduction reducing paycheck to zero
- direct deposit is not an expense or charge connected to an employees performance of duties, it is a deduction still received by the employee
- even if a checking account can't be considered a savings account, the DOL can allow at its discretion additional deductions that would comply with the law
- the lack of action by the DOL against the practice constitutes it being allowed
- there was a court case allowing a company to continue mandatory direct deposit when it was included in a collective bargaining agreement

My opinion of the matter is that employees do not need to authorize direct deposit. They are free to demand that they be payed in lawful money or check. Employees are free to look for a new job. If employees do not authorize deductions, employers are bound to pay wages with lawful money or check, and employees (or former employee) can demand that their last pay be sent by certified mail.