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Human Resources/Stopping Direct Deposit


Why would an employer stop direct deposit for all its employees?  The only excuse we got was "...circumstances beyond our control.", but some of us are worrying about the viability of the company.

Did they stop it for only one payroll or forever?

My guess would be a problem with the bank. When payroll is processed it is than sent to the bank to process direct deposit. The amount is taken out of the company bank account and put into each individual bank accounts for the employee direct deposit.

I had to stop direct deposit once because I missed the bank deadline and if I did direct deposit the checks would not be in until Monday and payday was Friday. So I stopped direct deposit for that payperiod and wrote manual checks.

The payroll paperwork for direct deposit has to go to the bank two days ahead of the payroll paydate in order for the amount to be processed on the paydate.

If it is only for one payday I wouldn't worry about it too much it could be a bank problem, it could be a computer problem where the file could not be created and sent to the bank or it could be a payroll processing problem.

If it is stopped forever I would probably ask if it was going to be offered again and when. It is not mandatory to offer direct deposit so there is not much else that can be done.


On another note there is one more reason if the company hired an outsourcing firm to do the payroll and that firm either does not do direct deposit or if the company did not want that firm to have their bank account numbers.

The other reason could be as you thought that the company has a low cash flow and needs the two days float that they processing takes away. They have to put the money out on Wednesday to pay out on Friday. If they do handwritten checks they can write them on Friday and the money comes out of the account on Friday instead of Wednesday.


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Shirley McAllister, CPP, PHR


I can answer questions pertaining to Compensation, Health Benefits, Retirement Plans, Payroll,Payroll taxes, Employee selection, Employee Termination, Training, and Employee Incentives. I have offices in U.S., Canada, UK, South Africa,Australia and NZ. I am most confident in the U.S. and Canadian but have knowledge of the internationals. I do not have extensive knowledge of South Africa, Australia and New Zealand. I do have some Human Resource Knowledge in those areas. Please do not ask me homework questions, I do not have time to answer them.


I currently hold both the U.S. and Canadian Payroll Certifications. I currently hold the SHRM PHR certification. I have worked in the Human Resources area with high emphasis on compensation and benefits for 25 years at the same company. My company is an international company and I work with our International offices whenever there is a Human Resource area needing addressed. I volunteer on the American Payroll Association hotline and have for the last 10 years or so. I answer many questions each week for other payroll and HR professionals, mostly on taxes, benefits and compensation issues. I have been the trustee for our 401K plan for Retirement benefits and our 125 Cafeteria Plan for Health Insurance benefits.

SHRM, National APA, National DOLEA, State National Mentoring Network I.O.M.A. Advisory Board


Boise State University Human Resource Certificate Program PHR through SHRM CPP through American Payroll Association Payroll Administrator and Payroll Supervisor certification through Canadian Payroll Association Published writer of Payroll and Benefit articles in a payroll Publication 25 years experience in an International Company

Awards and Honors
Citation of Merit 8 years in a row for hotline service for A.P.A. Honor Award for child mentoring service through RSVP and National Mentoring A "Pat on the Back" award for outstanding leadership as a Youth Group Leader by "The Salvation Army." Runner up for Employee of the Year at my Company twice and Employee of the month 4 times.

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I used to answer questions on when they had a similar quesition and answer section. I volunteer for APA hotline I also belong to several HR forums when I often answer questions

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