united-states employment finance labor-law
How are employer pay statutes enforced against offending employers?
<p>An employer recently made some strange demands as a part of a job offer. On advice from <a href="http://workplace.stackexchange.com/q/147517/106542">The Workplace Stack Exchange</a> I'm going to look for work somewhere else, but I'm concerned the employer is engaged in illegal activity and I feel I have a responsibility to make certain someone enforces the law against them. (the specific demands they were making are illegal for them to make). Note that there is a known form of scam where an employer will try to get an employee to do this so that the employer can conduct fraud on someone else without being as obviously involved in the conduct, and that is one of several reasons that these laws exist.</p>

<p>When an employer is violating these rules, what is the employee's next course of action? Is there a specific government enforcement agency I should file a complaint with, such as a banking regulator? Does the employee have to file a lawsuit in some specific jurisdiction (the job offer crossed state lines)? <strong>Since this is a matter that relates banking, labor law, and to both state and federal law, and has intersections with both civil and criminal law, what agencies or jurisdictions should this be pursued under?</strong></p>

<p>Since there were initially some who argued that these laws don't actually exist I have added the following paragraph to clarify: If you were not aware, U.S. federal law (and some state laws) restrict how an employer can implement their payroll. One of <a href="http://www.law.cornell.edu/uscode/text/15/1693k" rel="nofollow noreferrer">the restriction</a>s is that they can't force you to receive direct deposit at any specific institution. (They can't, for example, tell you that your direct deposit must happen at the same bank the employer uses.) In <a href="http://www.hrknowledge.com/wp-content/uploads/2017/08/Direct-Deposit-State-DD-Laws.pdf" rel="nofollow noreferrer">some states</a> the restrictions are <a href="http://law.stackexchange.com/questions/42694/can-an-employer-force-all-employees-to-open-bank-accounts-in-the-employees-name">even more severe</a>, prohibiting the requirement of direct deposit. The cited rules include some legal definitions that differ slightly from how you might read something at home (for example, the definition of a consumer, which can include employees). The definitions can be found <a href="http://www.law.cornell.edu/cfr/text/12/appendix-Supplement_I_to_part_1005" rel="nofollow noreferrer">here</a>.</p>

<p>You can <a href="https://www.consumerfinance.gov/complaint/" rel="nofollow noreferrer">file a complaint with the CFPB</a> regarding <a href="https://www.consumerfinance.gov/policy-compliance/rulemaking/regulations/1005/Interp-10/#10-e-2-Interp-1" rel="nofollow noreferrer">12 CFR §1005.10(e)(2)-1</a>.</p>

<p>Your individual state Department of Labor may enforce similar state level regulations too.</p>

<p>And, yes, this technically falls under the FDIC as well. You can also <a href="https://www.fdic.gov/consumers/assistance/filecomplaint.html" rel="nofollow noreferrer">file a complaint with them</a>, although it's very unlikely they would pursue any action against a non-bank employer.</p>

<p>The FTC has also pursued cases in violation to this statute, however those have only targeted lenders forcing the use of certain banks, and were not aimed at employers.</p>

<p>W.r.t. the federal statute, it is not all that clear. First, <a href="https://www.law.cornell.edu/uscode/text/15/1693k" rel="nofollow noreferrer">15 USC 1693k</a> says</p>

<blockquote>
  <p>No person may— ...(2) require a <a href="https://www.law.cornell.edu/uscode/text/15/1693a" rel="nofollow noreferrer">consumer</a> to establish an account for
  receipt of electronic fund transfers with a particular financial
  institution as a condition of employment or receipt of a government
  benefit.</p>
</blockquote>

<p>where "consumer" is defined to mean "natural person".</p>

<p>One recourse it to directly sue the offending employer under <a href="https://www.law.cornell.edu/uscode/text/15/1693m" rel="nofollow noreferrer">§1693m</a>, where you can recover actual damages, plus statutory damages, which in an individual action is between $100 and $1000. One might also pursue regulatory enforcement pursuant to <a href="https://www.law.cornell.edu/uscode/text/15/1693b" rel="nofollow noreferrer">§1693b</a>, which gives regulatory power to the Bureau of Consumer Financial Protection and the Board of Governors of the Federal Reserve System. The Board has authority in a limited set of circumstances but the circumstances statutorily delegated to Federal Reserve does not sensibly apply to an employer's actions. The Bureau otherwise has authority. Specifically, they have authority over certain "<a href="https://www.law.cornell.edu/uscode/text/15/1693a" rel="nofollow noreferrer">electronic fund transfers</a>", which is defined as any transfer of funds not originated by paper, and excluding various specific cases (check guarantee service, purchase of securities...). Paycheck deposit seems to clearly qualify as an electronic fund transfer.</p>

<p>The regulation ("regulation E") is spelled out <a href="https://www.ecfr.gov/cgi-bin/text-idx?SID=2891ef5e67e28685411ebc0057a2c60c&amp;mc=true&amp;node=sp12.8.1005.a&amp;rgn=div6" rel="nofollow noreferrer">here</a>. The issue that you will face, w.r.t. regulatory enforcement, is that the regulations address banks and not employers. Employer involvement comes in via the concept of "payroll card account",</p>

<blockquote>
  <p>which is an account that is directly or indirectly established through
  an employer and to which electronic fund transfers of the consumer's
  wages, salary, or other employee compensation (such as commissions)
  are made on a recurring basis, whether the account is operated or
  managed by the employer, a third-party payroll processor, a depository
  institution, or any other person</p>
</blockquote>

<p>The Bureau's regulations (§1005.18) impose requirements on financial institutions offering prepaid accounts, and includes the following:</p>

<blockquote>
  <p>For payroll card accounts, a statement that the consumer does not have
  to accept the payroll card account and directing the consumer to ask
  about other ways to receive wages or salary from the employer instead
  of receiving them via the payroll card account using the following
  clause or a substantially similar clause: “You do not have to accept
  this payroll card. Ask your employer about other ways to receive your
  wages.” Alternatively, a financial institution may provide a statement
  that the consumer has several options to receive wages or salary,
  followed by a list of the options available to the consumer, and
  directing the consumer to tell the employer which option the consumer
  chooses using the following clause or a substantially similar clause:
  “You have several options to receive your wages: [list of options
  available to the consumer]; or this payroll card. Tell your employer
  which option you choose.” This statement must be located above the
  information required by paragraphs (b)(2)(i) through (iv).</p>
</blockquote>

<p>That is, the bank must tell you that you don't have to accept this account. </p>

<p>It seems that the options for enforcement of the federal law are either for you to sue, or to <a href="https://www.consumerfinance.gov/about-us/blog/so-how-do-i-submit-a-complaint/" rel="nofollow noreferrer">complain to Consumer Finance</a> 
for enforcement against the employer's bank. Following the online complaint submission link does not in any obvious way lead to a complaint about an employer. Apparently, federal recourse is against the bank.</p>
