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Direct deposit provisions - Iowa

RegSenseState InfoCompensationIowaPayrollCompensationBest ResultsHR ManagementEnglishFocus AreaHuman Resources

Iowa law allows employers (public and private) to require direct deposit, but with specific conditions:

  • Direct deposit is mandatory only for employees hired on or after July 1, 2005.
  • Employers cannot require direct deposit if:
    • The cost of opening or maintaining a bank account would reduce the employee’s wages below minimum wage.
    • The employee is covered by a union contract that prohibits mandatory direct deposit.
  • Employees must be allowed to choose their own financial institutions for payroll deposits.

Citations

  • Iowa Code 91A.3(3)(a)
  • 15 USC 1693 et seq. — Electronic Funds Transfer Act (EFTA)
  • 12 CFR Part 1005 — Electronic Fund Transfers (Regulation E)
  • FOH Chapter 30 RECORDS, MINIMUM WAGE, AND PAYMENT OF WAGES (U.S. DOL – page 11, Sec. 30c)
  • 29 CFR 531.35 — “Free and clear” payment; “kickbacks”
['Compensation']
['Payroll', 'Compensation']
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