united-states employment labor-law banking payment
Can an employer force all employees to open bank accounts in the employees&#39; names?
<p>[asking regarding federal law in the U.S.A. only]</p>

<p>Recently I have noticed low wage employers such as fast food and retail requiring employees to open a bank account through the employer. Such employers insist that, by policy, they only pay through a company-issued debit card and will not pay using traditional methods such as a paycheck. Some also offer to arrange direct deposit with a bank, but will not offer any other form of pay.</p>

<p>Word of mouth seems to be that these policies are illegal, but I have had difficulty finding information on this topic that is not from the card-issuing entities.</p>

<p>Can a U.S.-based employer legally mandate their employees open a bank account upon hiring?
If employers can or cannot, what section of the law defines who can and cannot compel a citizen into banking against the citizen's will?</p>

<p>Under federal law, an employer may impose direct deposit as a condition of employment.</p>

<p>The Electronic Funds Transfer Act at <a href="https://www.law.cornell.edu/uscode/text/15/1693k" rel="nofollow noreferrer">15 USC 1693k</a> only says that employers may not require an employee to have a bank account <em>at a particular bank</em>:</p>

<blockquote>
  <p>No person may—
  (1) condition the extension of credit to a consumer on such consumer’s repayment by means of preauthorized electronic fund transfers; or
  (2) require a consumer to establish an account for receipt of electronic fund transfers <strong>with a particular financial institution</strong> as a condition of employment or receipt of a government benefit.</p>
</blockquote>

<p>If the employee is allowed to choose their bank, then such a condition is legal under this law.  The government's interpretation of this law is clarified in <a href="https://www.law.cornell.edu/cfr/text/12/appendix-Supplement_I_to_part_1005" rel="nofollow noreferrer">12 CFR 1005 Supplement I</a> at 10(e)(2):</p>

<blockquote>
  <ol>
  <li>Payroll. An employer (including a financial institution) may not require its employees to receive their salary by direct deposit to any particular institution. <strong>An employer may require direct deposit of salary by electronic means if employees are allowed to choose the institution that will receive the direct deposit.</strong> Alternatively, an employer may give employees the choice of having their salary deposited at a particular institution (designated by the employer) or receiving their salary by another means, such as by check or cash. </li>
  </ol>
</blockquote>

<p>That said, individual states can create their own legislation, and many have made it illegal under state law for an employer to require direct deposit.  You didn't name a particular state so I can't be more specific, but there is a chart <a href="https://www.paycor.com/resource-center/can-employers-make-direct-deposit-mandatory" rel="nofollow noreferrer">here</a> created by a payroll company showing the legality of such policies by state.</p>

<p>Note that in some sense, the employee is not really being "compelled" or "mandated" to have a bank account - if the employer insists on using direct deposit, the employee is free to go look for a different job.  US law does tend to recognize that there is a major power imbalance in employer-employee relationships, so there are many regulations; but at its root, it's treated as a contract between two independent parties who may each set whatever conditions they want, and enter into the contract only if they can agree.  </p>

<p>In contexts other than employment, I would expect even fewer restrictions on how a bank account could be set as a condition for something.  For instance, it could be a condition for using a particular product or service.  Again, if you don't want to open a bank account, you are free to not use that product or service.</p>
