My ex-employer was a nasty son of a bitch who always tries to pull something, so I go straight from giving my fifteen seconds notice to visiting the bank and making sure that my now-ex-employer can in absolutely no way whatsoever try to remove anything from my account. Nope, can’t happen. Not only would that not be allowed, it would be illegal.
Well, that’s good. Except, of course, I check my account this weekend and find a debit from my employer (showing the AC, same as direct deposits always did) equivalent to the cost of my last laptop. Which I returned, but I’ll admit was in pretty rough shape. Still, it was returned.
So, I go talk to the girl at the bank, fill out a few affidavits, and by tomorrow I should have the money back in my account.
Here’s the kicker. I ask her how we go about removing any sort of access to my account, and she says that since they have the account number and routing number it CAN’T BE DONE. The only, and I mean ONLY, way to do that is to close the account.
This can’t be right. What this means is that if anyone gets ahold of those two numbers (numbers that are on the bottom of EVERY SINGLE CHECK YOU WRITE), they can then go ahead and empty your account.
Is that really how it works? Because of that’s the case I’m not sure why they bother putting a password on my online banking account.
I was told pretty much the same thing in a somewhat similar situation, but it wasn’t just a matter of them having the routing and account numbers – it was the fact that I had authorized direct deposit to begin with. Somehow or other, it seems that authorization just cannot be revoked once given.
Maybe that’s completely untrue – in fact, I hope it is. But it is what I was told by my credit union at the time.
Didn’t follow all of that but there is a subtle distinction between them taking money from your account and them “correcting” a previous deposit via a stop payment type action. Is that a possible explanation?
I believe that the form you submitted to set up direct deposit also allows the company to reverse any direct deposits made in error. Here is an article from the New York Times about such a case. (Although your situation is a little different, since they weren’t withdrawing money deposited in error.)
Well, that part I’m not going to argue. I wasn’t surprised, and like I said, I expected it which was why I went to ask the bank about it in the first place.
The part I find so unbelievable is that not only is a DD agreement two-way (and, can obviously be used for whatever they hell they feel like when they feel like), but that it can’t be canceled.
I recommend people open multiple accounts with their bank.
One account is exclusively used for incoming money (e.g. direct deposits)
Another account is used exclusively for outgoing money (writing checks, paying bills).
That way, a criminal who compromises your checking account doesn’t have access to even more $$$ of the paycheck that gets deposited.
Likewise, when you leave your job you can close the “direct deposit” account without messing up your regular checking account – therefore, you don’t have to re-configure your automatic online bill-pay, or order new paper checks, etc.
Segregate your bank accounts into incoming & outgoing.
Companies don’t pay their payroll out of the same bank account that they deposit their customer payments. There is some wisdom in that.
With today’s online banking web interface, you can easily move funds from the “direct deposit” account over to your regular checking account with click of a mouse.
Escalate it to her manager. This was not a case of correcting an erroneous direct deposit; it was the unauthorized issue of an electronic debit instruction. Your direct deposit authorization only authorized your employer to make deposits of your compensation into your account. This was no such thing.
Frankly, the whole thing is pretty close to wire fraud. And if the bank manager doesn’t help, tell him/her you’ll bring it up with your state’s AG and local law enforcement.
*But maybe if you didn’t call her “the girl” at the bank, she might be more helpful.
At the time the company made the deposit, the reasonable assumption was continued employment for the employee. When the employee quit, it is a reasonable action by the company to evaluate any advances of pay or other benefits (the computer in this case) and make the appropriate adjustments.
Obviously there is still the dispute over the value of the laptop and how much should have been recovered but the basic guiding principle seems to be in the company’s favor.
I suppose you’ve heard us lawyers talk about reasonableness before, let me give you a protip: unilateral invasions of a former employee’s bank account fall outside the ambit of “reasonableness.”
AFAIK many if not most states have rather strict payday laws in place favoring the employee. From what I’ve seen in a few states, an employee would have to sign over explicit permission for such “adjustments” to be made.
Thank you. For sake of discussion, lets assume the company overpaid with that direct deposit. What is the general process they should have taken to make the correction?
I don’t know how it is where you have worked, but in my experience, paychecks are meant to cover the prior period, during which you already worked, and are not an advance for the next period on the expectation that you will work.
I call her “Rachel” to her face. Behind her back I think of her as the girl who last week assured me that there was no way for them to actually remove anything from my account.
There is no “advance payment”. We got paid on the 1st and 15th. I got my pay on the 15th for work performed from the 1st to the 15th. There was a reason I chose the 16th to quit.
I have worked for companies where advanced vacation was allowed or loans were made against future salary. They loaned me leave with an expectation that I’d work and accumulate vacation time to pay back the loaned time. If I quit without getting there, they’ve overpaid me.