Good morning, welcome to my latest Monday Morning Briefing, and Happy Halloween. I gave you so much content the previous two Briefings, I decided to give you a few weeks off to absorb it all. A few of you actually made comments such as “where did I go?” Don’t worry; I’m here – just keeping busy on all of your cases and getting ready for my favorite season of the year.
That’s right, it’s time for Employee Handbook Updates. And to that end, please see this year’s flyer for the Raines Feldman Annual Employee Handbook Update Program, along with information on how to join our Labor Advisor Program for 2023. The costs for the annual update, as well as updates if you skipped the last year or two, are all on the invoice. The costs for this year’s Labor Advisor Program, which includes the update and either a half hour or one hour of legal advice for the upcoming calendar year 2023 (all for a flat fee), are also included. So please, take a look. As always, we prepare the updates in the order that we receive your invoices with payment, so get your orders in early! This is the earliest we have ever gotten this out to you – we have worked hard to be responsive to your requests.
DOING YOUR DIRECT DEPOSIT PROPERLY
One issue that has come up recently with a few clients has had to do with direct deposits of paychecks. Many employers make use of this convenient method of depositing paychecks for employees, and for the most part, many employees benefit from it. But in California, employers must remember a few simple rules.
First, employers CAN NOT mandate the use of direct deposit. Not all of our employees have bank accounts, after all. Therefore, employees must authorize the use of direct deposit, in writing. Most employers have a simple form that authorizes the start of direct deposit, either attaching a copy of a void check or including the details of the employee’s bank account.
But here is the last one that many employers in California do not realize. The following statement comes directly from the FAQs of the Department of Industrial Relations for the State of California about “direct deposit:”
“Direct deposits of wages to an employee’s bank, saving and loan, or credit union account that were previously authorized by the employee are immediately terminated when an employee quits or is discharged, and the payment of wages upon termination of employment in the manner described above shall apply UNLESS the employee has voluntarily authorized that deposit and provided that the employer complies the provisions of Labor Code Section 213(d) relating to the payment of wages upon termination or quitting of employment.”
So here is what this means. Once an employee quits or is terminated, the right to pay them their wages via direct deposit is also terminated. And there are situations where it would be handy to pay someone by way of direct deposit for their final wages, let’s say in a contentious termination when the employee is refusing to come to work, or you do not want the employee to report to work (maybe the employee is even violent), but you need to get the employee paid immediately. Getting a check by messenger is dicey – you may not be able to confirm the last known address. Once you start mailing the check, you are already late by at least a day.
BUT, if you read the above section from the FAQs, it says that the right to pay the employee by way of direct deposit terminates UNLESS the employee has authorized that deposit and the employer timely pays the employee upon termination. So this is the trick. When you have your employees fill out those direct deposit forms, ADD A LINE THAT SAYS THAT THEY VOLUNTARILY AUTHORIZE AND AGREE TO ACCEPT THEIR FINAL PAYCHECK BY WAY OF DIRECT DEPOSIT. Have a separate signature or initial by it. If you do that, then you should be able to pay your employees their final paychecks by way of direct deposit in California. It needs to be a separate line item. But if you do that one simple, extra step, you should be good to go.
Okay, that’s it, I am overdue for pumpkin carving and costuming.
Stay safe tonight – I know my whole neighborhood goes out on a Halloween Trail tonight. I can’t wait. I hope you all have a wonderful holiday, wherever you are. The real holidays are just around the corner now.
Let’s bring this one home, my friends.
#StandWithUkraine