Kansas Employers May Require Direct Deposit
June 1, 2007
by Employment & Labor Law / Employee Benefits Group
Stinson Morrison Hecker LLP
Copyright © 2007
Kansas employers will soon be able to designate the method by which their employees receive their wages: in cash, by check, via direct deposit, or through the use of a payroll card, under a new Kansas law (H.B. 2316) that takes effect this summer.
Options – Under the new law, an employer may designate the method by which employees receive wages, provided all wages are paid by one or more of the following four methods: (1) in lawful money of the United States; (2) by check or draft which is negotiable in the community wherein the place of employment is located; (3) by electronic fund transfer or deposit to an automated clearinghouse member financial institution account designated by the employee; or (4) by payroll card.
Alternative Payment Method Required for Direct Deposit – An employer that elects to pay wages only via direct deposit or electronic fund transfer must offer an alternative payment method as a default option for employees that fail to designate a financial institution account for electronic fund transfer or deposit. The alternative payment method may be by a payroll card.
Payroll Card – A payroll card is a card issued to an employee by an employer, bank or other entity on behalf of an employer, onto which an employee’s net wages are loaded on regular paydays from a payroll card account and made accessible to an employee. An employer that elects to pay wages using a payroll card must allow employees at least one means of fund access withdrawal per pay period at no cost to the employee for an amount up to and including the total amount of the employee’s net wages, as stated on the employee’s earnings statement.
30-Day Notice Requirement – At least 30 days prior to implementing a payroll program that uses only direct deposit or a payroll card, an employer must either: (1) conduct one or more employee forums to educate employees regarding the use of a direct deposit or payroll card program offered by the employer; or (2) distribute educational information to employees about direct deposits or payroll cards (as they may be used under the payroll card program offered by the employer).
May Charge for Lost Cards – An employer may not charge an employee initiation, loading or other participation fees to receive wages payable in an electronic fund transfer to a payroll card account, with the exception of the cost required to replace a lost, stolen or damaged payroll card.
Bottom Line – Employers must still pay all wages due to employees at least once a month, on regular paydays designated in advance by the employer, cannot retain any interest in wages paid by electronic funds transferred, and may have to negotiate direct deposit / pay cards with any applicable labor union.
Stinson Morrison Hecker LLP is one of the country's largest law firms with more than 335 attorneys in more than 45-industry-focused areas. If you would like more information regarding this summary, please contact one of our Employment & Labor Law and Employee Benefits attorneys.
Law at Work is designed to give general information and is not intended to be a comprehensive summary or to treat exhaustively the subjects and matters covered. The information appearing herein does not constitute legal advice or opinions. Such advice and opinions are provided only upon engagement with respect to specific factual situations. Nothing contained herein shall be considered as an admission in any matter or controversy.
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