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13 Jun 2021 | by devteam

Just Ask Jacob: Be cautious about requiring direct deposit of wages

Q May we require our employees to use direct deposit? If so, what recourse do we have if an employee won’t provide his account’s routing number and other bank information?

A In most states, employers cannot require employees to be paid through direct deposit. However, there are some exceptions. For instance, employers in Texas can require direct deposit of wages with some restrictions. But be aware that the Equal Employment Opportunity Commission (EEOC) might view any requirement that employees use direct deposit as having a disproportionate impact on minorities, who may not have ready access to bank accounts.

Q We have an employee who will be leaving for active military duty for about one year. What are the requirements for continuing her benefits?

A If an employee who has health insurance coverage provided by her employer deploys for active military duty, she can elect to continue the coverage much as she would under COBRA. In your situation, you can require the employee to pay the entire premium. However, if an employee serves fewer than 31 days of military duty, you cannot charge more than her ordinary contribution for the premium.

Q One of our employees is out on unpaid Family and Medical Leave Act (FMLA) leave. What is the best way for him to pay his portion of benefit premiums since there is no paycheck from which we can deduct them? Should we require him to send us a personal check?

A You can require the employee to pay his contribution amount by check, or you can cover his premiums until he returns from FMLA leave and then require him to reimburse you. Often, the latter option is more convenient for the employee. Upon his return to work, you can deduct the premium reimbursement over several paychecks.

Q We have a policy that states we will pay out accrued vacation time only if an employee leaves voluntarily and provides two weeks’ notice. Is this legal, or are we required to pay out accrued vacation even if an employee is fired or doesn’t provide adequate notice?

A It depends on the state where you’re located. Some states require employers to pay out accrued vacation when employees separate from employment, while others don’t. For instance, Texas requires employers to pay departing employees for their accrued vacation only if they have promised to do so in a written policy or agreement. You should contact your department of labor for more information on your state’s requirements.

Jacob M. Monty, the managing partner of Monty & Ramirez, LLP, practices at the intersection of immigration and labor law. He can be reached at or 281-493-5529.


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