Can an employer require me to open an account at a specific financial institution for direct deposit?

UPDATED: Sep 30, 2022

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Can an employer require me to open an account at a specific financial institution for direct deposit?

I have recently been offered a new job at a local credit union. Upon completing
my new hire paperwork, I was told that they require direct deposit into one of
their own credit union accounts. While I understand that direct deposit can
legally be required, I thought that federal labor laws stated that direct deposit
can only be required if the employee can choose the institution the funds will go
into. I was basically told in order to get a job with them, I had to open a
savings account with the credit union. They offer no other way to receive
paychecks, so it is a condition of employment.

I am hoping you can clarify this for me. Can they legally require me to open an
account at their specific financial institution in order for me to become an

Asked on August 15, 2017 under Employment Labor Law, Wisconsin


M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

Under federal law, an employer cannot require that its employees use any particular financial institution for receiving direct deposit of wages. However, this does not prevent an employer from requiring direct deposit so long as the employee chooses the receiving bank. That having been said, an employer may give its employees the option of having their salary deposited at a certain institution designated by the employer or receiving their salary by another check, cash, etc. At this point, you can contact your state's department of labor and/or an employment law attorney for a further explaination of your rights.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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