Request By:
Mark L. Miller
Assistant Counsel, Department of Labor
620 South Third Street
Louisville, Kentucky 40202
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Martin Glazer, Assistant Attorney General
You seek an opinion of this Office as to the legality of the following:
An employer has initiated a pay system wherein all payroll checks are directly deposited in a local banking institution which established individual checking accounts in the name of each employee. Such payments and deposits are exercised without the express request, authorization, or permission of the involved employees. Monthly service charges are assessed by the bank in the event the employee/depositor fails to maintain a minimum balance in the checking account. A charge of $4.00 per month is assessed if a balance of $400.00 or more is not maintained and a charge of $6.00 is assessed if the balance is not kept between $250.00 and $400.00. These deductions are made without the written authorization of the affected employees. You advise that the employer has refused to pay the employees directly by check.
You point out some of the pertinent statutes that may affect the aforesaid procedure.
KRS 337.010(1)(c) defines "wages" as including any compensation due to an employee by reason of his employment ". . . such wages to be paid in legal tender of the United States or checks on banks convertible into cash on demand at full face value, subject to such allowances made in this chapter."
KRS 337.020 requires employers to pay their employees semi-monthly and an employee may have a right of action "for the full amount of his wages due on each regular pay day."
KRS 337.060 prohibits an employer from withholding an employee's wages agreed upon, except where required by statute or when expressly authorized in writing by the employee.
We have previously issued OAG 68-279, copy enclosed, which authorized a bank deposit plan. But, there, the employee could draw one free check per month up to the total amount of his take-home pay.
It seems that the plan now under discussion requires the employee to pay a fee to the bank should he wish to withdraw his entire pay check, since he would have less than a minimum balance in said bank at the end of the month. This would be accomplished without the employee's express authorization. To that extent, the plan would violate KRS 337.010(1)(c), 337.020, and 337.060. Criminal penalties are attached to such violations. KRS 337.990(1) as to KRS 337.020; 337.990(3) as to KRS 337.060.
Therefore, in our opinion, the present plan is illegal, because the employee is not receiving his full pay, but must pay a charge to the bank in order to obtain his entire pay for the affected pay period.