Mandatory Direct Deposit By State
Is it possible to make direct deposit a requirement for your employees? That depends. It all relies on your state's employment law and employee categorization.
According to the American Payroll Association's "Getting Paid in America" survey, 93% of U.S. employees are paid through direct deposit. Although it is by far the most popular payment method, some employees still prefer to get a conventional printed paycheck.
Is it possible to make direct deposit a requirement for your employees? That depends. It all relies on your state's employment law and employee categorization, as it does with most things in HR.
We've put together a table to assist your business in keeping track of mandated direct deposit laws no matter where you are:
| Can You Make it Mandatory? | Covered Employers | |
|---|---|---|
| Alabama | Private Sector: Yes / Public Sector: No | All Employers |
| Alaska | No | All Employers |
| Arizona | Yes | All Employers |
| Arkansas | No | Private and State-Government Employers |
| California | No | All Employers |
| Colorado | No | Private Employers |
| Connecticut | No | All Employers |
| Delaware | No | Private Employers |
| District of Columbia | No | Private Employers and Local Governments |
| Florida | No | All Employers |
| Georgia | No | All employers except those in the farming, sawmill, and turpentine industries . |
| Hawaii | No | All Employers |
| Idaho | No | All Employers |
| Illinois | No | All private employers and local governments, but not state and federal governments. |
| Indiana | Yes | All Employers |
| Iowa | Yes: Employers may not require employees hired before July 1, 2005, to participate in direct deposit. Employers may require a new employee to sign up for a direct deposit as a condition of hire unless the cost to the employee of establishing and maintaining an account would effectively reduce the employee’s wages to a level below the minimum wage. | All Employers |
| Kansas | No | All Employers |
| Kentucky | Yes | All Employers |
| Louisiana | Yes | Public Sector or State Government |
| Maine | Yes | All Employers |
| Maryland | No | All employers under various statutes |
| Massachusetts | Yes | All Employers |
| Michigan | Yes | All Employers |
| Minnesota | Private Sector: No / Public Sector: The Commissioner of Labor & Industry may require direct deposit for all state employees | All employers under various statutes |
| Mississippi | No regulations regarding direct deposit | All Employers |
| Missouri | No regulations regarding direct deposit | All Employers |
| Montana | No | All Employers |
| Nebraska | No regulations regarding direct deposit | All Employers |
| Nevada | No | All Employers |
| New Hampshire | No | All Employers |
| New Mexico | No | All employers except employers of domestic labor in private homes and employers of livestock and agricultural labor |
| New York | No | All Employers |
| North Carolina | Yes | All Employers |
| North Dakota | Yes | All Employers |
| Ohio | No regulations regarding direct deposit | All Employers |
| Oklahoma | Private sector: Yes / State government: Yes | All employers under different circumstances. |
| Oregon | No | All Employers |
| Pennsylvania | No regulations regarding mandatory direct deposit | All Employers |
| Rhode Island | No | All Employers |
| South Carolina | No | All Employers |
| South Dakota | Yes | All Employers |
| Tennessee | Yes | Private employers with at least 5 employees |
| Texas | Yes | All Employers |
| Utah | Yes | Private employers except those involved in farm, dairy, agricultural, viticulturally, or horticultural pursuits; stock or poultry raising; household domestic service; or other employment in which a written agreement provides different terms. |
| Vermont | No | All Employers |
| Virginia | No | All Employers |
| Washington | Yes | All Employers |
| West Virginia | State institutions of higher education: Yes / Employers subject to the WPCA: No | Employers under certain circumstances |
| Wisconsin | Yes | All Employers |
| Wyoming | No | All Employers |
Source: Paycor
Payroll Processing
Easy-to-navigate software that lets you pay your people safely and on time, and always keeps you compliant.
Direct Deposit Authorization Form
Download the form you need to complete with your employees to properly set up direct deposit payments.