By Jaimie Julia Winters
With only nine township employees not opting for direct deposit and three recent incidents of double paycheck cashing, Padmaja Rao, Montclair’s chief financial officer, thinks making the township’s payroll mandatory direct deposit is overdue.
In 2013, New Jersey passed a law requiring all state employees to receive their pay through direct deposit. Eliminating the cutting and delivery of paper checks saved the state nearly $250,000, while also ensuring the checks could not wind up in the wrong hands – saving not only the state, but also banks, hundreds of thousands of dollars that would have gone toward investigating fraudulent check cashing.
The law also gave counties, municipalities and school districts the ability to mandate their employees to switch over to direct deposit.
With the onset of deposits by smart phone, the risk of having checks deposited twice – via mobile, where the check is photographed, and at the ATM, where the check is physically deposited – has increased, Rao said to the mayor and council on April 11. Banks are now pushing and giving incentives for company payrolls to become completely direct deposit.
Deputy Mayor Robin Schlager and Councilperson Renée Baskerville both were concerned that the switch to direct deposit would then require all employees to have bank accounts.
Provisions allow an employee to elect to receive a debit card that could be used anywhere including some banks to get cash, said Mayor Robert Jackson.
Employees were sent a memo on March 7 with the proposed change, said Schlager.
Although the law provided for all governmental agencies to require mandatory direct deposit, private companies in New Jersey still can not mandate employees to make the switch.