I have a question about Direct Deposit.
My wife gets her paychecks through DD as do I. But hers unlike mine arrives a day after everone else at her employers’ gets paid, instead of at 12.01 midnite the day of payday like mine does. (She’s a temp btw)
Has anyone else experienced this?
Is it legal for the money to be hel an extra day like this?
I seem to recall that there was something illegal about this practice, but I could be mistaking.
Thanks in advance for your responses
Not really sure about the answer, but I think it may have to do with who her business does their DD with. My company does there’s with Paychex, and I actually get my deposit the day before everyone else. The way it works is that the company automatically pays me the day before the checks are issued for a 40 hour work week. Then my company pays them back the next day. If there is any discrepency in the amounts, then it is adjusted my next pay period. Dunno if that’ll help you though.
Mine’s normally deposited either three, sometimes 5, days prior to the US Government’s official pay date. They do this in order to encourage people to use DD.
The temp thing might have something to do with it. She might want to ask her payroll department to be sure.
When you say she gets her pay a day after everyone else does, do you mean everyone else at the company she’s working at or at the temp agency she’s working for? When our D.D. was delayed a couple months ago, it was posted to my account on the afternoon of payday, instead of at midnight as we were accustomed to. Our H.R. department apologized for the delay, but took the position that direct deposits were not legally ‘late’ if the posted by the close of the business day. I don’t know if that’s true or if they were just blowing smoke, but it sounds plausible.
However, if your wife’s getting paid after the pay date for the people at the company she’s working at, this may be irrelevant. Her money is actually coming from the temp agency she’s technically working for, and they undoubtedly have their own policy about when paychecks are cut. As long as they are consistently following their own policy, it probably doesn’t matter whether they are being consistent with the policies of their clients …
This is funny. When I was in the military, the big, local banks used to advertise something to the effect that “direct deposit accounts get paid two days early!”
So what? It’s still the same number of days between paydays! And you run out of money two days earlier (if you’re living paycheck to paycheck).
It may have something to do with your bank as well. They may accept the deposit, but not make funds available til the next day. Some banks do stuff like that to gain an extra day of interest.
Sorry let me explain better. ’
All of her fellow temps who get paid by check, get their checks on wednesday, while she get’s a receipt, for her direct deposit. The cash is not transferred until the following morning.
Well, in that case, I’d say there’s definitely something to worry about. How reputable is this company? Not to fling accusations about or anything, but is it possible they’re floating their checks? (They can’t issue the direct deposit without funds to back it up-but they sure can issue paychecks. But dread the day that the expected funds aren’t there the next day …)
First you have to understand that the term “direct deposit” covers a whole lot of ground. To cut through the confusion, the answer probably lies in the method of direct deposit used by the companies in question. Electronic direct deposit, where the bank recieves a file, tape, etc. with the deposit information is usually, but not always, set up (by the paying company)to be avilable the morning of payday. This means that the bank posts the file around midnight of the previous day. Paper direct deposit, where the paying company sends actual checks or a paper listing of deposit information, is usually received by the bank on the morning of payday and posts that night.
If the method of deposit is the same, I would say that the temp company has an agreement with the bank that their file be posted on a specific day. Their logic may be that since employees who get paper checks won’t really have access to the funds until the next day then neither should direct depositors. Or perhaps the temp company’s payroll account is set up not to be funded until the day after payroll since the paper checks would likely not begin to clear until then.
I don’t know what state your in, and IANAL, but I doubt the practice is illegal.
The Great Gazoo pontificates:
I can cite numerous federal regulations and customer agreements showing that assertion to be patently false. Can you cite one instance where it was true? Didn’t think so.
Doctor Jackson
FWIW, Michael Moore in his book “Adventures in a TV Nation” (HarperCollins 1998) discusses a like situation in Philadelphia. In 1995, CoreStates Bank in Philadelphia had a policy of putting a hold on deposited checks for up to 10 business days. People who wrote checks against that balance were charged up to $30 per check in NSF fees. According to Crackers, the Corporate Crime-fighting Chicken, this is a fairly standard practice. No information as to any changes in policy at this or other banks since 1995, nor any legal information in the book as to the banking regs, but it is an example of something like what Gazoo suggested. Also unknown whether holds were placed on direct deposit funds.
It could be because your wife may have different bank than her coworkers. I have Direct Deposit, as does everyone at my work. My money is usually in the bank on Thursday morning, a day before payday. A couple times, it’s even been in the bank on Wednesday evenings. Other people I work with, who have different banks, get their money on Friday paydays.
Thanks everyone for your responses.
First off, I didn’t suggest anything. The Great Gazoo did, if there’s going to be two of us, please be specific.
Second of all, direct deposit and the deposit of checks by an individual customer are very different things. Speaking for both banks I’ve worked for, holds can (but won’t always) be placed on funds depositd via check from another bank by a customer, however, we have never held funds from a direct deposit. (The bank will, BTW “cover” checks that come in until the “foreign” check clears.)
stuffinb - my guess is that the time delay is because temp agencies traditionally do most of their payroll by actual paper checks. As Dr. Jackson noted, paper based direct deposit can take longer than tape based deposit.
Responses to a couple of questions raised in this thread.
What the Banking Industry generally considers “Direct Deposit” is one that is originated through one of the Automated Clearing Houses. This would be considered an ACH deposit and the funds are immediatly available.
Banks often receive notice of a pending ACH deposit a few days before the deposit is actually received. Banks will often post these to an account when notice is received if the payer is a govermental unit or some large established organization.
If the Temp Agency is originating an ACH deposit, there is no reason for the deposit to be consistently a day late. I would suspect that the Agency is making an actual over the counter deposit or some type of private excahange transaction with the bank of deposit.
As to availability of deposited checks, Federal Reserve Regulation CC would apply. In general terms the outside limits on availability are 2 days for a local (same check processing region) check and 5 days for a non local check. Exceptions may apply if the account is less than 30 days old or if the check is above $5,000. Each Bank has a “Funds Availability Statement” that sets out its rules on availability. If the deposit is handled under an exception basis, the Bank must provide you written notice of that fact.
On an operating basis, most banks in New England give availability to local checks in 1 day and non local checks in 3 days.
My mother is VP of Human Resources for a major company and according to her the employers have to have the check (or monies) in your possession no later than seven days after time went in.
Go ahead and cite, but this has happened to me, and with a major bank. The explanation was - we didn’t get the direct deposit on time. It caused an overdraft, which I was able to overcome by some work. Talking to the payroll service, they said it happens all the time. This could be something to cover the payroll service’s ass, but Banks do have an incentive to withhold deposits. That’s why the law had to be written.
Federal regulations are one thing, actual practice…???
Think IRS regulations. 
Great Gazoo, it sounds like you were involved in a mixup between the bank and the payroll service. Who was telling the truth? I have no way to know for sure, but I do know your premise that “…Banks do have an incentive to withhold deposits.” is flawed. The deposit does not enter the receiving bank’s (your bank) books until it is posted to an account in that bank. Therefore, the receiving bank receives no benefit until the deposit is posted. If you are claiming that the bank posted the deposit to a “holding account” and waited one day to move the funds to your account then the receiving bank would have had a means to profit - but extraordinary claims required extraordinary proof.
Think of it this way: when someone writes a check to you, who benefits if you hold the check one day before you deposit it? The check writer, of course. He has satisfied his debt to you but the money remains in his account. In the case of banks, the receiving bank would be the ‘you’ in the example above; the bank where the check was drawn would be the ‘check writer’.
The one who really stands to gain in your story is the payroll company. One extra day’s interest on a payroll account can mean thousands of dollars.
I don’t know about electronic transfers, but I’m pretty sure that there’s a federal reg or statute that sets forth when banks must make funds available when you deposit a check.
(I believe it is entitled “Regulation CC”)
As I recall, if a bank doesn’t give you the money on time, you’re entitled to a minimum of $100 or so in damages.
(standard disclaimer about legal advice)
Balthisar wrote:
Let’s assume that you make $1500 per paycheck, after taxes, twice per month. Also assume that money is worth 8% per year to you, and you plan on working there for ten years. That’s about 66 cents interest per paycheck you’re missing, and the whole series has a present value of about $110. Not a whole lot, but it’s something.
Several years ago, the company I work for switched from paying us on the 1st and 15th, to the 6th and 20th. I did this same kind of calculation applied to the company’s payroll, and its present value for a ten-year series was around $15 million they were saving in present dollars by paying us five days later.
Could be. But, this is why the law was written (the 3 day law on deposited checks, not direct deposit). The bank gets the deposit, but doesn’t credit it to your account for several days. Some banks actually credited your account the next day for a payroll deposit before the law was written, but some waited up to 5 days or even more. Now that the law is in place, they all seem to wait 3 days, even the ones that used to credit your account the next day. The money is in the bank’s account. My piddly little check means nothing, but 1,000,000 piddly checks = enough money to make it worthwhile.
On direct deposit, it has never been more than one day, but it has been 1 day different more than once. Not a big deal in most cases, but the first time, it caused some grief.
I don’t think you can say the bank’s wouldn’t or couldn’t do this, because the law was written to stop them.