Starting January 1, 2014, both private and public sector employers in Oregon will be permitted to mandate wage payment via direct deposit under certain conditions.
Private sector employers will no longer need an employee's prior authorization to use this method of wage payment, as is required under current Oregon law. However, an employer must provide a paper paycheck to an employee who requests it orally or in writing.
Public sector employers, other than the federal government, will also be permitted to mandate direct deposit. In addition, they will be able to pay employees via preloaded paycards with employee consent, or by paper paycheck if the employer determines that direct deposit would not be practical or efficient. Public sector employers will also be permitted to provide employees' paystubs electronically. However, employers must honor an employee's request for a paper paycheck or paystub.
Regarding direct deposit, Oregon employers will still be required to allow employees to choose the financial institution within the state into which their pay will be deposited. Employers will also be required to continue to provide employees with an itemized paystub.
Regarding wage payment via paycard, an employer's program will still be required to meet all of the following conditions:
Employees' participation in the program must be optional;
The employer's communication regarding employee consent must be made in the language that the employer principally uses to communicate with employees;
Employees must be allowed at least one transaction per pay period without incurring a fee, including a withdrawal of the entire net pay;
Employees must be able to choose to receive their pay in another form free of cost;
Deposits must be made to a bank, savings and loan association or credit union with a place of business in Oregon; and
Employees must be provided with an itemized paystub each pay period.
Itemized paystubs may be provided to employees electronically only: (i) if the employees individually agree; and (ii) if the employees can print or store their paystubs when they are received.
Direct deposit has become the most popular way to pay wages due to various advantages that make it a much more attractive option than paying wages via cash or check. Many employees have come to expect direct deposit to be a payment option because it is safe and convenient. Employers often prefer it because it may reduce paperwork and costs.
Paycards, or payroll cards, are a fast growing method of paying wages to employees using electronic means. They are a good alternative for employees who do not, or cannot, have a bank account that is capable of receiving direct deposits.