In today’s technology-driven environment, it is no surprise that more than 95 percent of U.S. employees receive their paycheck via direct deposits, according to the American Payroll Association. Given the numbers, if you are not paying your employees via direct deposit, you have to ask yourself why.

Sure, you may have some lingering employees that still would prefer a physical check, but why should you let the minority drive your business decisions.

Did you know that depending on the state, you can mandate, and even make it a condition of employment, that employees receive their wages electronically given you meet each states’ requirements? For example, Michigan allows employers to require all classification of employees living within the state to receive wages electronically, as long as they are provided with an option of receiving it via direct deposit or paycard, along with meeting some other general requirements.

Given Federal law does not mandate pay stubs for workers, depending on the state, you may also not be required to issue a pay stub. Yet, the Fair Labor Standards Act still requires employers to keep accurate records of employees’ wages and hours worked, and be able to provide the records should they be requested. Leveraging a payroll software that allows a self-service site with 24/7 availability, like DM Payroll Services’ MyInfo website or mobile app, can help meet this requirement.

Wondering what states will allow you to mandate direct deposit? Check out this interactive state-by-state map that details out direct deposit compliance laws for you. When in doubt, always consult with your payroll provider or legal counsel.

The Benefits of Using Direct Deposit

Employers and employees alike, have several advantages to using direct deposit payroll methods. Check out what they are below.

Employer Benefits

•   Cost savings: According to SOLE Financial, companies can save $3.15 per payment when they ditch paper checks.
•   Provides a greater level of control over payroll expenses and cuts down on manual labor time of HR or payroll staff.
•   Automates the process by using a third-party payroll provider to streamline data collection, recording and reporting.
•   Eliminates risks related to human errors, fraud and stolen checks.
•   Ensures timely payment of paychecks, even when employees are not in the office.
•   Offers employees a secure option for receiving wages.
•   Encourages an environmentally friendly footprint.
•   Excludes the need to perform bank reconciliations related to payroll.

Employee Benefits

•   Saves time not having to go to cash a check.
•   Provides access to funds within a few hours of payroll being deposited.
•   Paychecks can be allocated into multiple accounts to help encourage financial wellness for day-to-day checking expenses, as      well as savings’ initiatives.
•   It is a more reliable and safe option.
•   Guarantees that they will be paid on time.
•   No possibility of losing a check or it being stolen.
•   Many banks offer free checking services to employees who will be paid via direct deposit.

If you want to explore your direct deposit options, contact DM Payroll Services today. We have a seamless, secure software to help digitalize your payroll process.