340 [79 Op. Att’y

LABOR LAW

MANDATORY DIRECT DEPOSIT OF WAGES IMPERMISSIBLEUNDER

MARYLAND WAGE PAYMENT AND COLLECTION LAW

February 18, 1994

The Honorable Jean W. Roesser

House of Delegates

You have requested our opinion concerning the legality of a

private employer’s mandatory direct deposit program for the

payment of wages. 

For the reasons stated below, we conclude that such a

mandatory direct deposit program would violate Maryland law. An

employer may encourage employees to agree to direct deposit but

may not mandate the use of direct deposit as a condition of

employment. 

I

Analysis

The Maryland Wage Payment and Collection Law, Title 3,

Subtitle 5 of the Labor and Employment (“LE”) Article, Maryland

Code, was enacted by Chapter 686 of the Laws of Maryland 1966.

One provision of the law, former Article 100, §94(b) of the Code,

provided as follows: “Payment of wages or salaries shall be in

lawful money of the Untied States or check payable at face value

upon demand in lawful money of the United States.” The term

“shall” was unmistakably meant as a mandate to employers to pay

their employees in cash or by check. 

No form of direct deposit was lawful under the Wage Payment

and Collection Law as originally enacted. Under a direct deposit

program, an employee receives neither cash nor a check. Instead,

the employee receives a notice that a sum equaling the wages owed

has been deposited in the employee’s bank account. 
Gen. 340] 341

 The “cash or check” requirement was codified at the time at 1

former Article 100, §94(b)(3).

 The term “employer” means “any person who employs an 2

individual in the State or a successor of the person.” LE §3-501(b). The

term “person” is defined in LE §1-101(d).

Recognizing the stringency of the law, the General Assembly

amended it in Chapter 142 of the Laws of Maryland 1974 to create

the following exception to the “cash or check” limitation: “Nothing

contained in this section shall prohibit the direct deposit of an

employee’s wages orsalary to the employee’s personal bank account

when so authorized by the employee.” The exception was codified

at former Article 100, §94(b)(4). As of 1974, therefore, an 1

employer had three options: cash; check; or direct deposit, but only

“when so authorized by the employee.” The evident intent was to

allow employees who found direct deposit more convenient to

accept that form of payment from the employer. There is no basis

for the inference that the General Assembly meant to subject

employees who did not want direct deposit to be compelled to accept

it nonetheless. An employer’s order that an employee agree to direct

deposit is not at all the kind of employee authorization that the

statute contemplated. 

The law today remains essentially as it was after the 1974

amendment. The general rule is stated in LE §3-502(c): 

Each employer shall pay a wage:

(1) in United States currency; or

(2) by a check that, on demand, is

convertible at face value into United States

currency.2

The sole exception is set out in LE §3-502(d): “This section does

not prohibit direct deposit of the wage of the employee into a

personal bank account of the employee in accordance with an

authorization of the employee.” The Revisor’s Note states that the

section is “new language derived without substantive change from

former Art. 100, §94(b).” (Emphasis added.) 
342 [79 Op. Att’y

 In light of this conclusion about State law, we need not consider 3

whether mandatory direct deposit is permissible under federal law.

II

Conclusion

In summary, it is our opinion that the Maryland Wage Payment

and Collection Law authorizes an employer to offer a voluntary

direct deposit program to employees and to encourage its use, but

does not allow an employer to require employees to participate in a

direct deposit program.3

J. Joseph Curran, Jr.

Attorney General

Jack Schwartz

Chief Counsel

 Opinions & Advice