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Charge for direct deposit of paycheck - legal?

Posted by Pattie Hunt Sinacole  June 29, 2009 11:10 AM

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Q: I was recently hired by the school district in the town where I was a part- time librarian. I was surprised when I received my first 'teacher' paycheck as I was charged 50 cents for admin costs of writing the check (which is direct deposited). However, when I worked (and still sub) as a librarian for the same town - same type of check - same direct deposit - I am not charged the 50 cents. This does not seem right to me. Is this a)legal to charge someone money to write their paycheck and b) common.

A: You present a legitimate concern. I contacted Jeffrey A. Dretler, a partner in Prince, Lobel, Glovsky and Tye's Employment Law Group. He and I both are puzzled as to why your employer would be charging such a fee since it is likely less expensive for your employer to have your pay directly deposited in your bank account(s).

According to Dretler, some states have laws that specifically prohibit an employer from charging a fee to employees for direct deposit. Specifically, Dretler explains, "Massachusetts law does not specifically address direct deposit, but does require that an employer provide a paycheck to an employee for cashing at a bank or elsewhere 'without charge by deduction from the face amount thereof.' M.G.L. c. 148, § 149. The Massachusetts Attorney General, who has responsibility for interpreting and enforcing the state’s wage and hour laws, including this provision, would likely view your employer’s practice to be in violation of the law."

If you are a union member, Dretler suggests that you may want to speak with your union representative to see if your employer's actions are in violation of the applicable collective bargaining agreement. You may also contact the Massachusetts Attorney General's Office if you are not a union member or if you feel like your union representative is unable to help you.

Dretler further adds: "If the employer’s practice does violate Massachusetts wage and hour law, it is likely violating not just your rights but those of all other teachers in your town and could be vulnerable to a class action lawsuit. Since Massachusetts law provides for mandatory treble (triple) damages for wage and hour violations, your employer may be willing to change its practices if you raise it as an issue."

Direct deposits are certainly becoming more and more common. I know of no other employers who charge their employees for direct deposits. All of our clients offer direct deposits and most employees have their pay directly deposited today. It is a bit safer than a "live" check and a bit more efficient than mailing checks. Lastly, many of our clients are making an effort to be "greener." This is one simple step toward being a "greener" employer.

This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

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5 comments so far...
  1. I worked for a family-owned broadcast rental house in MA and they charged $3/check for direct deposit. They also didn't pay overtime. I didn't stay for long.

    Posted by This Is More Common Than You'd Think June 29, 09 01:50 PM
  1. if/when possible get another job--this employer clearly doesn't value it's people if it extracts 50 cents to pay you!

    Posted by wb1111 June 30, 09 05:17 AM
  1. That's insane. The employee should charge their employer for processing a check. In theory the employee can not do anything with a check they need to deposit it or cash it in order to get its true value (cash). The check is a convenience for the employer so they do not have to carry around large amounts of cash to pay their employees like in the old days. I would demand they pay me in cash.

    Posted by mars June 30, 09 11:10 AM
  1. So - you post three useless responses but not my well researched one. What's up with that?

    Posted by Dave Singleton July 1, 09 08:50 AM
  1. FYI -- the cite to MGL is incorrect. The proper law is M.G.L. c. 149 section 148.

    Posted by PJM November 24, 09 10:24 AM
 

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