- Check or Cash No Longer Only Options to Pay Wages in Tennessee
- August 13, 2010 | Authors: Kelly S. Gooch; James R. Mulroy
- Law Firm: Jackson Lewis LLP - Memphis Office
Tennessee’s wage payment law has been amended specifically to allow payment of employees by electronic automated funds transfers. Before the amendment, the law specified that payment should be by check or cash, but was silent on electronic payments.
Payment by Debit Card
The amended law (Tenn. Code Ann. Section 50-2-103(e)) also allows payment by credit to a prepaid debit card issued through a network system from which the employee is able to withdraw or transfer funds. The following conditions must be met:
- The employer must give employees the choice of being paid by electronic funds transfer rather than by debit cards;
- The employer must explain the payment system to employees and provide full written disclosure of any applicable fees associated with the prepaid debit card in advance; and
- Each employee must be able to make at least one withdrawal or transfer from the debit card each pay period at no cost to the employee.
If the employer provides full written disclosure and an employee elects to be paid through an electronic automated fund transfer, but does not designate in advance an account at a financial institution for the electronic funds transfer, the employer may pay the employee by prepaid debit card.