Mandatory Direct Deposit

May 14, 2007

Many employers rely on the decision in Statler  v. U.C.B.R, 728 A.2d 1029 (Pa. Cmwlth 1999) as a blanket justification for mandating that all employees submit to direct deposit.  In Statler, a union employee refused to sign a direct deposit authorization form as mandated by the collective bargaining agreement and the employee was fired. He was ruled ineligible for unemployment benefits because he engaged in willful misconduct because his refusal was unreasonable.

Those who rely on this case may be right; however, there is an important assumption underlying this reliance which can be described as follows:

  • The Pennsylvania Wage Payment and Collection Law requires the payments of wages be made in cash or check;
  • The Pennsylvania Electronic Fund Transfer law allows payment of wages by electronic transfer whenever a party requests the method of payment in writing;
  • The request must be in a written agreement that includes the terms under which a wage earner may withdraw the request and terminate the agreement;
  • Unionized employees make their collective request through the terms of the collective bargaining agreement negotiated by their authorized bargaining agent (the "Union").

Can nonunion employees be compelled to authorize or "request" direct deposit as a condition of employment or continued employment?