Section 5 - Paying the Employee Flashcards
Pay Frequency
These matters are left up to the individual states.
Payment on Termination
Regulated by the state but federal courts did rule that wages are “unpaid” unless they are paid the employers’ regular payday.
Payment Methods
All 50 states and DC either expressly require by law the payment of the employees by cash or check or do not have a lay regulating the payment method.
What are electronic paycards?
they are “stored value’ debit cards that the employer funs with the amount of employee’s net pay.
What is the direct deposit flow?
Employer –> ODFI –> ACH –> RDFI
What is ODFI?
Originating Depository Financial Institution
What is ACH?
Automated Clearing House
What is RDFI?
Receiving Depository Financial Institution
What is a prenotification?
Prenoitifcation involves sending zero dollar amounts through the ACH network as a test before the first actual direct deposit for an employee. Must be sent at least 6 banking days before.
Direct Deposit Regulations
- Federal and state share regulatory responsibility.
- the regulations state than an employer can require and employee to accept Direct Deposit if given the employee a choice among financial institutions
- the employer cannot begin direct deposit for an employee without a direct deposit authorization, does not have to be in writing
- employers can now generate a single entry reversal through the ACH network within 5 banking days from the date of original entry
What are the advantages to Direct Deposit?
Eliminates
- lost or stolen checks
- unclaimed or uncased checks
- employee time off to cash checks
- storage of cashed checks and related documents
- early preparation of vacation checks
- reconciliation of bank account with outstanding checks
What are the disadvantages to Direct Deposit?
- does not eliminate paper
- loss of “float” or interest
- cannot be mandatory in most states
- cannot dictate what RDFI
What are escheat laws?
State laws governing abandoned property.
We typically refer to the process of giving unclaimed property/pay to the state as escheatment.
Payment Upon Death
Most states regulate wages owed to deceased employees in terms of who the wages may be paid to, how much may be paid before administration of the deceased employee’s estate, and what conditions must be met before payment can be made.
Unclaimed Paychecks
These unclaimed wages become a form of abandoned property the employer must pay over to the appropriate state agency if they remain unclaimed for a certain number of years.
