N.J. Lawmakers Pass Bill Requiring Direct Deposit for State Employees (Feb. 4, 2013)
Feb. 4, 2013
New Jersey lawmakers in late January passed a bill designed to drive the state’s payroll system away from paper within 18 months by requiring all state employees to receive compensation by direct deposit beginning July 1, 2014. The bill, which passed the New Jersey Assembly by a vote of 74-0, also enables counties and county colleges, municipalities and school boards to opt to require mandatory direct deposit for all employee payrolls by the same date.
The measure requires that all employee pay information be available online via the employee’s assigned email address. The bill gives New Jersey’s treasurer the ability to make exceptions and provide waivers for certain employees and departments that cannot accommodate the technical requirements to issue payrolls electronically. The plan could save the state an estimated $540,000 annually in labor, postage and materials costs, according to a press release issued by five members of New Jersey’s Assembly who sponsored the bill. Separately, Oregon lawmakers on Jan. 14 introduced a bill that would authorize employers to pay employees via direct deposit “or by other means of electronic transfer.” The bill was referred to a committee.
The movement by states to shift payrolls from paper checks to direct deposit and prepaid cards is not widespread yet but it is “definitely a trend” gathering momentum, Cathy Beyda, an attorney in the Palo Alto, Calif., office of Paul Hastings LLC, tells Paybefore. Such proposed mandates vary widely in scope, including whether they apply only to public-sector employers or include provisions for private-sector employers. “The major obstacle to such a program is that many workers don’t have bank accounts … that is where (prepaid) payroll cards come in,” Beyda says.
