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Direct Deposit Laws by State

Author: Alice Gilman

The following chart summarizes the requirements under state law that an employer must comply with to legally pay wages into employees' checking or savings accounts by direct deposit. Most employers offer direct deposit as an alternative method of wage payment because it is generally a more secure, efficient and inexpensive method than paying employees in cash or with paper paychecks.

Federal Regulation E sets the overall rules and minimum standards an employer must follow when offering direct deposit and other types of electronic payments (e.g., paycards) to employees. Most states have adopted Regulation E's provisions into their wage payment laws. But many states provide even greater protections to employees than Regulation E, such as prohibitions on mandatory direct deposit or added employee fees, or requirements to provide a pay statement for each deposit.

On the chart, states that do not have a direct deposit law are marked N/A. In the absence of a state law, federal Regulation E may be followed.