The HR Specialist

2011 state laws regulating direct deposit and pay cards

04/28/2011

Direct deposit made life easier for employees, eliminating the Friday lunchtime run to the bank to cash paychecks. Pay cards take it a step further by marrying convenient deposits with ease of spending.

Pay cards are reloadable, prepaid bank cards—not credit cards. Each pay period, the employee’s pay is automatically loaded onto the card and available to the employee on payday.

Most states prohibit employers from mandating that employees receive their pay electronically—the banking basis of pay cards. Similarly, only a few states let employers mandate direct deposit. Many states also forbid employers and banks from charging a fee if employees decide cash out all their pay with one transaction.

Here's a brief summary of state laws affecting direct deposit and pay cards.

Note: States not listed have no laws governing direct deposit or pay cards

Alaska

  • Direct deposit: Voluntary
  • Pay cards: No law

Arizona

  • Direct deposit: Voluntary; employees get 1 free withdrawal,    pay statements
  • Pay cards: No law

Arkansas

  • Direct deposit: Voluntary; employees opt out via written, signed letter
  • Pay cards: No law

California

  • Direct deposit: Voluntary; employees pick in-state bank
  • Pay cards: Voluntary; employees get 1 free transaction, pay statements

Colorado

  • Direct deposit: Voluntary
  • Pay cards: Voluntary; employees get free access to full pay or may choose another payment method

Connecticut

  • Direct deposit: Voluntary
  • Pay cards: No law

Delaware

  • Direct deposit: Voluntary
  • Pay cards: Voluntary; employees get free access to full pay

District of Columbia

  • Direct deposit: Voluntary
  • Pay cards: No law

Florida

  • Direct deposit: Voluntary
  • Pay cards: Voluntary; employees get free access to full pay; in-state bank

Georgia

  • Direct deposit: Voluntary
  • Pay cards: No law

Hawaii

  • Direct deposit: Voluntary; disclosure required
  • Pay cards: No law

Idaho

  • Direct deposit: Voluntary
  • Pay cards: No law

Illinois

  • Direct deposit: Voluntary
  • Pay cards: No law

Indiana

  • Direct deposit: Voluntary
  • Pay cards: No law

Iowa

  • Direct deposit: May be mandatory for new hires; employees incur no bank charges; voluntary for everyone else
  • Pay cards: Voluntary; employees get free access to full pay

Kansas

  • Direct deposit: May be mandatory; alternative pay method must be offered; disclosure required
  • Pay cards: May be mandatory; alternative to direct deposit; employees get free access to full pay; disclosure required

Kentucky

  • Direct deposit: Voluntary; employees get pay statement, incur no fees
  • Pay cards: No law

Louisiana

  • Direct deposit: May be mandatory; employees incur no fees
  • Pay cards: No law

Maine

  • Direct deposit: Voluntary; employees get pay statements
  • Pay cards: Voluntary; employees get free access to full pay, pay statements

Maryland

  • Direct deposit: Voluntary
  • Pay cards: Voluntary; disclose fees

Massachusetts

  • Direct deposit: Voluntary employees pick bank
  • Pay cards: No law

Michigan

  • Direct deposit: May be mandatory; employees pick bank
  • Pay cards: May be mandatory if employees don’t elect direct deposit; employees get 1 free transaction; disclosure required

Minnesota

  • Direct deposit: May be mandatory unless employees object in writing
  • Pay cards: Voluntary; employees get free access to full pay; disclosure required; employers register with the state

Montana

  • Direct deposit: Voluntary
  • Pay cards: Voluntary; employees get free access to full pay and pay statements; disclosure required

Nevada

  • Direct deposit: Voluntary; employees get 1 free transaction, incur no fees
  • Pay cards: Voluntary; employees get free access to full pay; disclosure required

New Hampshire

  • Direct deposit: Voluntary; employees incur no fees
  • Pay cards: Voluntary; employee get free access to full pay; disclosure required

New Jersey

  • Direct deposit: Voluntary
  • Pay cards: Voluntary; employees consent in writing; get free access to full pay; disclosure required

New Mexico

  • Direct deposit: Voluntary
  • Pay cards: No law

New York

  • Direct deposit: Voluntary; may be mandatory for exempts earning more than $900 a week    
  • Pay cards: Voluntary for nonexempts; employees get free access to full pay

North Carolina

  • Direct deposit: May be mandatory; employees choose bank    
  • Pay cards: May be mandatory; employees get free access to full pay; if voluntary, fees begin on 2nd withdrawal

North Dakota

  • Direct deposit: Voluntary
  • Pay cards: Voluntary; employees incur no fees

Oklahoma

  • Direct deposit: May be mandatory if employees pick bank, otherwise voluntary; pay statements required
  • Pay cards: Voluntary; employees incur no costs; pay statement required

Oregon

  • Direct deposit: Voluntary; employees incur no fees
  • Pay cards: Voluntary; employees get free access to full pay

Pennsylvania

  • Direct deposit: Voluntary; employees get record of deposits
  • Pay cards: No law

Rhode Island

  • Direct deposit: Voluntary
  • Pay cards: No law

South Carolina

  • Direct deposit: Voluntary; employees get pay statement, 1 free withdrawal
  • Pay cards: No law

South Dakota

  • Direct deposit: Voluntary
  • Pay cards: No law

Tennessee

  • Direct deposit: May be mandatory; employees pick bank
  • Pay cards: May be mandatory if employees don’t elect direct deposit; employees get 1 free transaction; disclosure required

Texas

  • Direct deposit: May be mandatory; employer gives 60 days’ notice
  • Pay cards: Voluntary; employees get free access to full pay

Utah

  • Direct deposit: May be mandatory, if for preceding year employer deposited at least $250,000 in federal taxes and 2/3 of employees elect direct deposit
  • Pay cards: Voluntary; employees get free access to full pay and pay statements

Vermont

  • Direct deposit: Voluntary
  • Pay cards: Voluntary; employees get 3 free transactions; disclosure required

Virgina

  • Direct deposit: Voluntary; employees incur no fees
  • Pay cards: May be mandatory for amusement facility employees and all new hires

Washington

  • Direct deposit: May be mandatory if employees incur no fees
  • Pay cards: No law

West Virginia

  • Direct deposit: Voluntary
  • Pay cards: Voluntary; employees agree in writing

Wisconsin

  • Direct deposit: May be mandatory, if in-state bank, employees incur no fees
  • Pay cards: No law

Wyoming

Direct deposit: Voluntary
Pay cards: No law

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