Fees for wages paid on a paper check?
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Anonymous Member posted 05-20-2024 16:39
This message was posted by a user wishing to remain anonymous
We are a company in Illinois. Can an employer charge employees for having wages paid out on a paper check instead of direct deposit? I researched IL law and could not find anything on this. There are things stated employers cannot charge, but nothing on this subject.
Does anyone have information on this?
Thanks!
State law, and likely silent. Unless proven otherwise, it is usually not allowed to have anything in place which makes it impossible for the employee to not get their full net pay (such as a fee for the payment method). I suspect (not something I offer so I am not sure) optional things may be able to have a fee, such as daily or early pay options.
Anonymous Member posted 05-21-2024 12:17
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You can't charge a fee for processing payroll on a paper check. If we have employees that do not provide a direct deposit account, we have them sign up for a pay card.
If they are unable to get the pay card (some do get rejected), then we tell them their checks will be mailed. Most do not like to wait on a check in the mail, so they will eventually turn in a direct deposit account.
Shira Goodfellow posted 05-21-2024 15:23
Many organizations charge a minimal feel for printing a paper check, both for employees and vendors.
Dennis Pearson posted 05-21-2024 15:30
"Many organizations charge a minimal feel for printing a paper check, both for employees and vendors."
I don't buy this. Unless there is a special state rule, it is not proper/allowed to make the employee PAY to get their pay (meaning there has to be at least one method of getting paid which does not cost money).
The vendor deal is not making sense to me either. It is foolish to not use a reward card whenever possible. A vendor having to take a trim because their customer wants to pay by check? Never even heard of that, as most vendors make MORE when paid by check than paying card fees.
Shira Goodfellow posted 05-21-2024 16:19
I am aware of employers in multiple states, including Illinois, who require enrollment in direct deposit as the method of payment for wages. The same is true of vendors paid via A/P. If they chose not to be paid by direct deposit, a minimal fee (similar to the fee allowed for processing a garnishment) is taken ($2.50) is taken from each paper check. Again, most people want direct deposit so it's not an issue. And some employers might chose to institute a grandfather clause (anyone currently on a check not required to enroll in direct deposit, only new hires) and/or implement a waiver program to allow certain employees in certain circ*mstances to not be charged a fee for receiving a paper check.
Melisa Leeds, CPP posted 05-22-2024 11:21
I don't see how it would be legal to charge a fee when there are regulations that state with pay cards that they have to have an option to be able to withdraw their full funds from their account without a fee. You can charge a fee after the first withdrawal, but they have to be able to withdraw all funds the first time without a fee. If that is the case, how can you charge a fee for a check??
Kris Armstrong, CPP posted 05-22-2024 11:36
In Illinois, employers are not allowed to charge employees a fee for choosing to receive their wages via paper check instead of direct deposit. The Illinois Wage Payment and Collection Act ensures that employees have the right to be paid without any additional cost for choosing the method of payment.
According to the Illinois Department of Labor, employers must pay wages in cash, by check, or by direct deposit to an account at a financial institution designated by the employee. However, imposing a fee for opting out of direct deposit is not permissible.
I hope this helps!
Anonymous Member posted 05-22-2024 12:19
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Just because organizations do something doesn't make it legal.
In IL the DOL prohibits mandatory direct deposit. The language is very clear that direct deposit is an option at the employee's discretion, and must be voluntary, and is not voluntary if it is a condition of employment.
https://www.ilga.gov/commission/jcar/admincode/056/056003000C06000R.html
Anonymous Member posted 05-22-2024 16:04
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This is not an answer to your main question, as others have answered it best already, however a suggestion: my company was able to encourage electronic payment methods by requiring them to come to the office to pick up their check in person. Obviously this wouldn't be viable for large multi-state employers, but it worked pretty well for my small construction company, where the general superintendent delivers pay statements to the job sites weekly on payday, but for safety reasons, we can't have them carrying "cash equivalents" in transit to the sites, therefore checks need to be picked up in person by the employee at the main office.
