Can an organization require employees to pick up their paychecks only at specific times and dates? Can the company require employees to sign up for direct deposit? The Legal Clinic looks at which laws govern such actions.
Question: Is it illegal for a New York employer (or any other employer, regardless of where they are located) to mandate that paychecks be picked up only on Friday or Monday between the hours of 9:30 a.m. and 2:00 p.m.? Direct deposit is available to all employees, but some of them have declined that option.
The Fair Labor Standards Act -- the federal law that dictates a national standard for such things as a minimum wage, child labor policy, and overtime requirements -- does not contain a provision that governs the distribution of wages. See 29 U.S.C. § 201 et seq. (2011).
Wage distribution, therefore -- the time, place, and method through which an organization pays its employees for the work they have performed -- is a matter primarily governed by state law. The rules regarding whether or not such payment restrictions as outlined in your question violate the law will depend in large part upon where the company does business.
New York law sets varying standards for different classes of employees. Manual workers, for example, must, in most cases, be paid "weekly and not later than seven calendar days after the end of the week in which the wages are earned." N.Y. Lab. Law § 191(1)(a)(i) (McKinney 2011).
Clerical and other workers must be paid "in accordance with the agreed terms of employment, but not less frequently than semi-monthly, on regular pay days designated in advance by the employer." N.Y. Lab. Law § 191(1)(d) (McKinney 2011).
Additional, similar requirements are also set forth regarding railroad workers and commissioned salespersons. N.Y. Lab. Law §§ 191(1)(b),(c) (McKinney 2011).
The New York Labor Law, however, does not define precisely what is meant by the terms "paid" or "pay day" -- words that appear critical to the statute's interpretation within the context described in your question. See N.Y. Lab. Law § 190 (McKinney 2011).
The Fair Labor Standards Act is likewise silent on the subject. See 29 U.S.C.A. § 203 (2011).
The Random House dictionary, however, defines "pay day" as "the day on which wages are given or payment is made." By that standard, the pay day you describe would be either Friday or Monday -- the day on which payment is made to the employee(s) in question.
In the case of a manual worker, whether or not such a pay scenario would be considered lawful under New York law would likely depend on whether or not the employees' checks are made available within seven days of the relevant pay period's closing, as required by statute.
If, for instance, the pay period closes on a Friday, payment on the following Friday would be within the statutory seven-day maximum and therefore considered lawful under state law. A Monday pay day, though, would be outside the statutory window, and would not be lawful. See N.Y. Lab. Law § 191(1)(a)(i) (McKinney 2011).
Although your company offers its employees the option to be paid by direct deposit, such an offer does not change the fact that the company must still comply with state law regarding more traditional forms of wage payment and employees are within their rights to decline.
Almost without exception, it is not lawful for a company, no matter where located, to force or coerce its employees to accept payment by direct deposit. Under California law, for example, direct deposit may be used only when an employee has voluntarily authorized the deposit to a financial institution of his or her choice, and when the financial institution in question has a place of business located within the state. Cal. Lab. Code § 213 (West 2011).
Advance written consent for payment by direct deposit is likewise required in New York, although that state makes an exception for certain categories of professional, executive, administrative and farm workers. N.Y. Lab. Law § 192 (McKinney 2011).
Keisha-Ann G. Gray is senior counsel in the Labor & Employment Law Department of Proskauer in New York and co-chair of the Department's Employment Litigation and Arbitration Practice Group.