Prohibits employer withdrawal from direct deposit account without notice to and permission from account owner

BILL NUMBER:S2911

Title of bill

An act to amend the banking law, in relation to certain withdrawals from accounts to which direct deposits have been authorized

Purpose

To prohibit employer withdrawal from direct deposit account without notice to and permission from account owner(s).

Summary of provisions

This bill amends the banking law by adding a new section 8-a to require that no direct deposit agreement shall authorize any withdrawals from the account into which such direct deposits are to be made.

Any language within the agreement that says in any way that withdrawals by anyone other than the account owner(s) shall be void, unenforceable and to no effect. Instead, the language will be understood to mean that any request of withdrawal from anyone other than the account owners, must be accompanied by at least fifteen (15) days written notification by the financial institution, to the account owner(s). Such action would only be permissible when required by law, or upon receipt of the account owner(s) written permission.

Justification

This bill serves as protection to individuals who are participating in a direct deposit service agreement between their employer and their financial institution. The bill will ensure that withdrawals will not be made from an employee's account by employers without the permission of the owner(s) of the account.

If a situation arises in which there is a dispute between parties, no money should be taken from the employee's account without notice given, and the opportunity for due process allowed.

Legislative history

2011-12: S.1493 Referred to Banks 2010: S.2166 Referred to Banks A.3459 Referred to Banks 2008: S.1987 Referred to Banks 2006: S.1175 Referred to Banks 2004: S.4264 Referred to Banks

Fiscal implications

None.

Effective date

This act shall take effect immediately.