Pay Cards and Termed Employees

The payroll industry’s new buzz word is Pay Cards.  Pay Cards come in a variety of flavors (branded vs unbranded, individual accounts vs sub accounts), and they offer a great option as you encourage employees to move to direct deposit.  Even employees with no bank accounts can receive a pay card, reloaded each payroll, and for the payroll department it works just like direct deposit — you simply transfer the funds to the employee’s pay card account instead of a checking or savings account.  This eliminates your paper check which has to be printed, distributed or mailed, and reconciled.

While using pay cards for your un-banked employees can be very appealing, there may be times when it’s not the best alternative.  For example, it may not be in your best interest to load a pay card with a terminated employee’s final pay.  It may sound like a good idea at first — you can stop direct deposit immediately at termination and there is no paper check to deliver — but it might not be that easy.  Typically with pay cards, there is an authorization that must be signed by the employee granting you permission to load pay onto a card.  If you have a disgruntled terminated employee, it’s not the time to ask them to fill out paperwork!  Stick with the direct deposit of funds for terminated employees to make the final pay process more comfortable for everybody involved.

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