4

I have preferred to receive paper checks instead of direct deposit, as I find it easier to keep track of.

However, my employer has now announced that there will be a (quite large) fee associated with not doing direct deposit. I can understand maybe covering postage and the cost of an envelope, but this is much more than that.

Is my employer allowed to do this? (If it varies by state, I'm in Utah.)

Note: The only reference I could find is this: "Employers aren’t allowed to charge employees fees based on payment method." However, I'm looking for a more primary and complete source.

  • My employer does the same (in FL), and as they are a 50000+ people employer and always stay far on the safe side of the law, I am rather sure it's legal for them to do that. - The high cost comes probably from the need to have a secure system running only for the 2 or 3 they need to handle. – Aganju Jan 14 '16 at 2:39
  • Something the other answers did not address is they are probably simply passing on the cost of generating a paper check from their payroll processor. It is unlikely they are viewing this as a profit center. – Pete B. Jan 14 '16 at 15:12
  • 1
    Could you simply print the pay stub they provide you? – blm Jan 14 '16 at 18:01
5

I have worked for several different companies over the years.

Besides deduction for the expected thing: taxes, social security, insurance, retirement. I have also worked for companies that had a process for including in the deductions money for: charity (United Way), US Saving Bonds, A loan program for a new computer, purchasing of additional vacation day. I know of other companies where deductions are made for union dues and uniforms.

While I am not a Lawyer, if did find this part of the Utah labor code interesting:

(4) If a deduction is made from the wages paid, the employer shall, on each regular payday, furnish the employee with a statement showing the total amount of each deduction.

and

(6) An employer may not withhold or divert part of an employee's wages unless:

(a) the employer is required to withhold or divert the wages by:

(i) court order; or

(ii) state or federal law;

(b) the employee expressly authorizes the deduction in writing;

Which implies to me that if they tell an employee that there i a charge of X to get a paper check, and you agree to that in writing, then it would be allowed.

The cost of generating a paper check can be beyond the cost of postage. according to the Social Security administration in 2013:

Electronic payments are beneficial for the public and more efficient for the agency. They are inexpensive – it costs the government about $1.25 to issue a paper check; conversely, it costs only about $0.09 to pay a federal benefit electronically. In addition, electronic payments are significantly less likely to be lost or stolen compared to paper checks.

Utah law also requires a pay stub:

(5)(a) on the day on which the employer pays an employee, give the employee a written or electronic pay statement

0

You should probably ask a lawyer.

Looking at the Utah labor code, I see this:

An employer may not withhold or divert part of an employee's wages unless: ...

Your situation doesn't seem to fall under the exception.

An employer, if qualifies, may require you to accept direct deposit, though (same page, subsection 3).

  • I think subsection (b) under (6) would cover the employer. If the employee requests a paper check, part of that would be agreeing to withholding the fee for the paper check. – blm Jan 14 '16 at 18:05

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