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May 29, 2014

Re: Draft Ordinance Mandating Direct Deposit Pursuant to P.L. 2013. c. 28.

Dear Mayor,

The League has prepared a draft ordinance in response to recent legislation. This new law, P.L. 2013 c. 28, gives municipalities the option to mandate direct deposit.  The draft ordinance can be found www.njslom.org/documents/Direct_Deposit_052014.pdf.  We strongly urge that you review it, and this notice, with your municipal attorney.

There has been some confusion about the effect of this legislation, so some clarification is necessary. P.L. 2013 c. 28 does two things. First, it gives municipalities the option to mandate direct deposit after July 1, 2014.  Second, it prohibits municipalities from adopting new ordinances that allow for individual employees to request direct deposit after July 1, 2014 but it does not invalidate those ordinances that were already enacted.

Previously, municipalities have been able to adopt ordinances pursuant to subsection (a) of N.J.S.A. 52:14-15f, which allows for individual employees to request direct deposit.  P.L. 2013 c.28 created subsection (b) which allows for municipalities to make direct deposit mandatory. Subsection (b) also states that “no ordinance or resolution shall be adopted under subsection a. of this section on or after July 1, 2014.” This language indicates that while new subsection (a) ordinances will be prohibited from being enacted after July 1, 2014, subsection (a) ordinances enacted prior to July 1, 2014 will still be in effect. Consequently, employees of municipalities that have previously adopted subsection (a) ordinances will, after July 1, 2014, still be able to individually request direct deposit.

As stated above, subsection (b) gives municipalities the option to mandate direct deposit for employees through ordinance after July 1, 2014. The ordinance can exempt seasonal or temporary employees. The ordinance can also allow for employees to request exemptions from the direct deposit mandate.

Subsection (c) of the law allows for municipalities to provide “any information approved for distribution with net pay, and w-2 forms in accordance with applicable federal law” through the internet. If a municipality chooses to do this, it may do so only through “internet with restricted access and policies and procedures to protect the confidentiality of the information.”  We recommend that you speak with your municipality’s IT professionals regarding these requirements.

As stated above, we strongly urge that you review the draft ordinance and this notice with your municipal attorney.

If you have any questions please contact Ed Purcell Esq. at (609) 695-3481 x 137.

Very Truly Yours,

William G. Dressel, Jr.
Executive Director

 

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