Can I require an independent contractor to use direct deposit for payment instead of a check?

September 10, 2015
Can I Require Independent Contractors to Use Direct Deposit?

Yes, you can require an independent contractor, direct employee, or any other type of employee to use direct deposit in place of a check. In fact, in some states, receiving direct deposits can be included as a condition of employment. The Fair Labor Standards Act is the federal act that outlines federal standards for paying employees.

Restrictions on direct deposit

While employers may require employees to accept payments via direct deposit, state laws may allow for some restrictions:

  • Employers may not require employees to use a particular bank
  • Employers may not assess a fee based upon payment method
  • Employees must have access to their pay stubs

Federal recordkeeping

When issuing employee payments via direct deposit or by any other method, employers must follow the recordkeeping recordkeeping standards set by the FLSA.

Helpful links:

Payment of Wages/Direct Deposit Law - A state listing of direct deposit laws.

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