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How Direct Deposit Affects California Wage Reporting Laws

There are many state laws governing how wages may be paid to employees. For example, employers must include specific pieces of information on a California paystub, and employers cannot pay workers in coupons or gift vouchers in lieu of wages. In addition, there are reporting rules when workers are paid via an electronic method—also known as direct deposit.

California Requirements for Wage Statements When Using Direct Deposit

When wages are paid through electronic deposit, employees receive their wages directly into their bank accounts. While they do not need to physically cash a check, they also may not receive a wage statement that must accompany that check by law.

In order to remain compliant with wage reporting laws, employers who offer direct deposit in California must have:

Paper or e-statement options.

Any employer who offers the option of direct deposit must give employees the choice of receiving wage statements in paper or electronic form. Statements must be immediately accessible to employees on the date of each payday.

Secure payroll websites.

Employers often opt for third-party electronic systems to administer payroll. However, the law requires that any website where payroll information is stored or accessed must be secure to protect employees’ confidential information. Proper safeguards include a security firewall and login information that requires unique employee identification numbers and personal identification numbers (PIN).

Adequate recordkeeping.

The law requires employees to be able to easily find the required information on their wage statements. As a result, electronic wage statements must be made available to employees over the internet for print or download at all times. Employers are required to make wage statements available (either electronic or printed) for a period of at least three years.

These reporting requirements can have a significant impact on a wage and hour case. For example, if an employer refuses to pay an employee for overtime, the employee’s wage statement would be an inaccurate record of the employee’s hours worked. This is a direct violation of the Labor Code, and carries significant penalties for the employer.

Direct deposits must be voluntary

Under California law, your employer can't force you to make a direct deposit. 

Direct deposit and waiting time penalties

California law allows employers to make a direct deposit when you are terminated/ discharged or quit. See California Labor Code Section 213. 

However, this doesn't allow employer's to fail to pay all wages owed at time of termination. Specifically all minimum wages due, meal period premiums, rest break premiums, overtime and/or failure to pay for all time worked. 

 

Learn more about your rights in a wage and hour case, read through our free book, California Truck & Delivery Driver Wage Theft: The Ultimate Straight Talk Guide to Getting Your Hard Earned Wages Back

California's leading wage lawyer

I'm not saying this to brag. I'm telling you this so you will know that I know what I'm talking about.  I represented the workers in the leading California Supreme Court case on California unpaid wages law - Brinker vs. Superior Court. I wrote the winning briefs in the recent California Supreme Court cases - Augustus vs. Superior Court (the leading case on rest breaks) and Williams vs. Superior Court (the case that gives you the right to getting the names of your co-employees in a PAGA case). 


I am regularly asked to testify before the California State Senate and the California State Assembly on unpaid wages law. I helped write the recent changes to California's unpaid wages PAGA laws. 

William Turley
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