CAI’s Advice and Counsel Team answers several questions from members daily. One question that the team members often receive deals with employee pay— Can employers in North Carolina mandate that their employees be paid by direct deposit?
In today’s post, Advice and Counsel Team Member John Gupton provides an answer to this common employer question:
Yes. The NC Department of Labor (NCDOL) considers direct deposit as merely another legal form of payment. Under the NC Wage and Hour Act (NCWHA), an employer may select any legal form of payment, so long as payment is made in full on the designated payday, subject to authorized deductions and legal withholdings. Acceptable forms of payment include cash, money order, negotiable checks and direct deposit into an institution whose deposits are insured by the United States government or an institution selected by the employee.
It is entirely up to the employer whether or not to pay its employees by direct deposit. An employer can make the payment of wages by direct deposit a condition of employment without violating the NCWHA. An employer can also require that its employees use a particular financial institution so long as that institution is insured by the United States government. However, from an employee relations perspective, it would be best to allow your employees to use their own financial institution if you are going to require that they be paid by direct deposit.
To learn more about this issue, please visit the NCDOL’s website and review the section on Direct Deposit Enforcement
You can also call the Advice and Counsel Team at 919-878-9222 or 336-668-7746 for your questions regarding direct deposit.