Direct deposit can't be mandatory.

Byline: On the Job by Bureau of Labor & Industries For the Register-Guard

Q: I work for a cleaning supply company. Soon, all employees will be required to use direct deposit. I prefer my check to be handed to me. My check tells me more than just my earnings. It lists my personal and vacation time, my 401(k) contributions and my taxes taken out. Is it legal for my employer to require me to use direct deposit?

A: Your employer may not switch your paycheck to direct deposit if you object.

The Oregon law that dictates the way of paying employees, ORS 652.110, states that "an employer and an employee may agree to authorize an employer" to pay wages due to the employee by direct deposit.

The Bureau of Labor and Industries interprets this to mean that it is unlawful to require the direct deposit of paychecks, and that employers must obtain each employee's voluntary consent in order to use direct deposits or electronic transfers for pay purposes.

Note, however, that even if you agree to direct deposit, your employer must provide you an itemized wage statement at each payday.

The law also requires that any direct deposit of wages be "without discount," meaning that the employer may not charge or deduct any fee for the electronic transaction.

Although the law prohibits making direct deposit mandatory for current employees, it doesn't clearly address whether an employer could make direct deposit a condition of employment for job applicants.

The bureau's enforcement policy is not to take complaints from newly hired employees on the issue of mandatory direct deposit, when the employer had given prior notice to the prospective employees that direct deposit would be required as a condition of employment. However, employers should consult with an employment attorney before proceeding with such a policy, because the courts may conclude, for public policy reasons, that making direct deposit mandatory is improper even at the pre-employment stage.

Employers who do use direct deposit for paying wages should be aware that doing so doesn't change the strict deadlines for paying an employee's final wages upon termination. However, the law says that even the final paycheck may be paid by direct deposit, "provided the employee and the employer have agreed to such deposit."

Although the Oregon law doesn't specifically require it, employers would be well advised to obtain employees' written consent before switching to direct deposit.

Q: I work for a private educational institution, and we're trying to determine whether the Martin Luther King Jr. holiday is federally mandated. We are offering MLK Day as one of our paid holidays, but we're wondering whether we can allow some employees to take the holiday on Jan. 15 rather than on the 21st so that we can keep our operations going.

A: If you're not bound by a collective bargaining agreement that guarantees employees specific holidays, then it's your policy - and not federal law - that determines employees' rights to paid holidays. MLK Day is observed by most on the third Monday in January (the 21st this year), but you could certainly adopt a policy of observing the holiday on the 15th (MLK's actual birthday) or scheduling employees for alternate days off.

On The Job is written by attorney Dan Grinfas of the Oregon Bureau of Labor and Industries. The column answers questions about employment law. To contact BOLI, call [phone], or write to BOLI, 800 N.E. Oregon St. #32, Portland OR 97232.