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Paying Employee Wages

Oregon’s wage and hour law requires every employer to pay employees all wages due and owing on a regular payday. ORS 652.120(1). As with everything, methods for paying wages have evolved over time. Payment by check and even cash remains a standard practice for some employers (though we’d recommend getting a signed receipt whenever paying wages in cash). In a “paperless” world, however, employers are increasingly moving toward electronic methods for paying employees’ wages.

Direct dep​osit

Oregon law permits the payment of wages (without any charge or discount to the employee) by direct deposit. ORS 652.110(3). The caveat here is that employees have the right to request payment by check, and that request can be verbal or in writing.

Pay cards

Employers may also pay wages through other means like an automated teller machine (ATM) card or a payroll card. The conditions on these types of electronic transfers are a bit more restrictive:

  • An employer and an employee must agree to this method of wage payment;
  • The employee must have the ability to make an initial, full withdrawal of the net wages due without any cost to the employee; and
  • The employee must be able to choose a different means of payment that involves no cost to the employee.

An agreement to pay wages in this way must be in the language the employer typically uses to communicate with the employee and may be revoked in writing. (The agreement is revoked 30 days after the employer received notice – 10 days from a written or verbal notice by a seasonal farmworker - unless otherwise agreed upon.) ORS 652.110(7).

Note that payment by ATM may require special arrangements to ensure an employee can make a full initial withdrawal of the net wages due. Almost all automatic teller machines carry only $20 bills and require withdrawals be made in multiples of $20. Since net wages rarely divide up so neatly, the employer may need to ensure employees have the option to present their card at a teller window to withdraw the full net amount - without incurring a fee.

Electronic wage statements 

Employers that implement an electronic wage payment system still need to comply with the rules requiring that payments be accompanied by an itemized wage statement​. Paper statements are required unless the employee:

  • Expressly agrees to receive the statement electronically; and
  • Has the ability to print or store the electronic itemized statement at the time of receipt.

OAR 839-020-0012(3).

Employers should obtain and keep written authorization from the employee.

Paying final wages

Employers who use an electronic method for paying wages should be aware that a paperless system doesn’t change the tight deadlines for payment of final wages upon termination. For more information on the final paycheck deadlines please see our factsheet on “Final Paychecks.”

Under wage collection law, employers may pay final wages via direct deposit if “the employee and the employer have agreed to such deposit.” ORS 652.140(4). That said, the best practice is to avoid direct deposit for paying final wages unless the employer’s financial institution confirms that the deposit will be made to the ex-employee’s account on time. 

Collective bargaining agreements

Nothing discussed on this webpage regarding wage payments via direct deposit or payroll card would limit the rights of an employee or otherwise affect an employee covered by a valid collective bargaining agreement. ORS 652.110(8) and ORS 652.140(5).

Frequently asked questions

Q. Switching to direct deposit has saved us a tremendous amount of time and we’re wondering whether we can make payment by direct deposit a condition of taking the job. 

A. We couldn’t recommend it. Although the anti-retaliation provisions of ORS 652 and ORS 653 would not apply to an employer who opts not to hire or to terminate employees because they invoke the right to receive a paper check, that does not mean another legal theory or tort claim couldn’t be filed. In addition, you may miss out on a quality employee who is credit-challenged or uncomfortable having their wages directly deposited. 

Q. Our bank requires us to deposit cash into our payroll account for direct deposits three days before our regular payday. Today, no sooner had I transferred the funds, I got an email from a field supervisor saying he’s terminated an hourly employee and requesting an off-cycle final paycheck be forwarded to their branch office. I know we have a deadline here, but how are we supposed pay final wages without paying our ex-employee twice?

A. Ideally, your bank can do a line-item stop payment on the deposit for the ex-employee, and you can process a final check for payroll along with any additional wages due. If not, you will still need to ensure final wages are timely paid. This may mean processing the paper check even though an additional deposit will be paid to the ex-employee’s account in three days. Your field supervisor should consider requesting a promissory note or other acknowledgement from the ex-employee when the final paycheck is handed over (without making it a condition of payment). That way, you’ll have something in hand to support collection efforts if your bank cannot reverse the deposit later.

Q. We have an employee who resigned with two weeks’ notice. We understand that final wages will be due on the employee’s final day of employment but her final day is not our regular payday. The employee has been on direct deposit since starting with the company and she said she would prefer a deposit to an old-fashioned payroll check. In fact, she sent our payroll department a message saying that she didn’t mind waiting until the next regular payday, a week after her final work day, to receive the direct deposit. May we accept this employee’s “waiver” to process the final wage payment a week after final wages are due?

A. Not without some risk. Although employers may pay final wages via direct deposit if “the employee and the employer have agreed to such deposit” the statute does not specifically allow for payment of final wages by deposit after the date by which they are due. ORS 652.140(4). The employee’s waiver may not set aside her right to penalty wages that accrue for untimely payment of final wages.

With two weeks’ notice, your bank may well be able to arrange an off-cycle direct deposit for the employee’s final day of work. It’s worth an ask!

Updated June, 2019

Nothing on this website is intended as legal advice.  Any responses to specific questions are based on the facts as we understand them, and not intended to apply to any other situations.  This communication is not an agency order.  If you need legal advice, please consult an attorney.  We attempt to update the information on this website as soon as practicable following changes or developments in the laws and rules affecting Oregon employers, but we make no warranties or representations, express or implied, about whether the information provided is current.  We urge you to check the applicable statutes and administrative rules yourself and to consult with legal counsel prior to taking action that may invoke employee rights or employer responsibilities or omitting to act when required by law to act.