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February 26, 2014

RE:  DIRECT DEPOSIT LEGISLATION

Dear Mayor:

The League would like to remind you of P.L. 2013 c.28 [2], which gives municipalities the OPTION, after July 1, 2014, to require that all pay be distributed through direct deposit. (See our March 20, 2013 Dear Mayor Letter [3]) The effect of this law is two-fold. First, it would cut costs associated with paper checks. Second, because it gives municipalities the ability to establish policies regarding direct deposit by ordinance, it would make direct deposit a non-negotiable issue under the New Jersey Employer Employee Relations Act (NJEERA).

Previously, N.J.S.A. 52:14-15f, only allowed direct deposit on an individual basis, if the employee asked the "proper disbursing officer"
for direct deposit. Under paragraph (a) of the law, the local governing body then had to pass an ordinance or resolution in order for the direct deposit to take effect. This law changes that.

  After July 1, 2014, municipalities WILL NOT be able to do direct deposit on an individual basis pursuant to subsection (a) of the law. If an individual was previously receiving direct deposit, they would continue to do so. As a consequence of this law, municipalities now have the option to create a direct deposit policy, for all employees, with whatever exemptions it sees fit under subsection (b) of the law.

Specifically, subsection (b) gives municipalities the option to require direct deposit for all employees but states "The governing body is authorized to grant an exemption from the requirements adopted pursuant to this subsection on such terms and conditions as the governing body may deem necessary. The governing body is authorized to grant an exemption for seasonal and temporary employees as the governing body may deem necessary.”

  Lastly, subsection (c) of the law deals with accompanying information concerning pay and other forms. This section would allow a municipality, which has adopted a direct deposit policy pursuant to subsection (b) of the law, to provide all other accompanying documents to employees online. This would mean that pay stubs could be transmitted electronically, as well as W-2 forms. The law does require, though, that policies and procedures be put in place to protect the confidentiality of these documents.

If you have any questions please contact Ed Purcell Esq. at (609) 695-3481 x137, or epurcell@njslom.org.

Very truly yours,

William G. Dressel, Jr.
Executive Director

 

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