Introduction
Direct Deposit is a payment method through which employees receive their paychecks electronically into their bank accounts, enabling them to receive their net pay directly without the need to deposit a physical check. For employees set up with direct deposit, especially those with multiple bank accounts on file, it is imperative to make sure the accounts are set up correctly and configured in the correct order. Through Empeon's Request & Approvals feature, it may also be possible for employee's to have the ability to add, edit and delete their direct deposit information directly from their ESS Hub. Whether this is the case or not, understanding how direct deposit accounts should be configured and where this information is maintained in Empeon Workforce is essential to ensuring accurate employee payments.
Setting Up & Managing Direct Deposit
When adding a new employee into Empeon Workforce, direct deposit information can be entered along with their employment details. If this is not done during the initial setup, the employee will receive their paycheck as a live (paper) check by default.
To review or make changes to an employee's direct deposit setup, navigate to Payroll section of their Employee Profile and select Direct Deposit.
If there are bank accounts set up, additional information about the existing account can be reviewed by clicking the dropdown arrow to the left of the Bank Name.
Should any existing accounts need to be updated, there are two ways to go about this: "Change" or "Edit". Changing the account information will generate a new record with the updated information and end date the previous record which creates a historical record to be saved on file within the system. Editing the record, will simply overwrite the existing information without establishing a historical record of the changes. The changes made while Editing will appear as if it was always that way since it was initially entered into the system. When adjusting existing account information, it is recommended to always Change the record in order to establish a historical record of previous configurations.
To add a new account, click the blue "plus" icon in the top right corner of the Direct Deposit section.
Adding a Direct Deposit Bank Account
When adding a new bank account for direct deposit, a window will appear with the following fields of information to be entered:
- Effective Date - The system will automatically set the start date to the current date the account is being added, however there is the ability to change the date accordingly by clicking the "Pencil" icon. This can be helpful if the addition of this account is scheduled for a future date.
- Routing Number - If the system does not recognize a routing number that you feel is valid, please contact Empeon customer service for assistance.
- Account Number - This will need to be entered twice to ensure accuracy.
- Account Type - Specify whether the bank account is a checking or a savings account.
- Amount - Select the "$" icon for a fixed dollar amount to be deposited from every check or select the "%" icon to assign a percentage of each paycheck to be deposited. If this is the only account being set up, the amount should be set to a percentage of 100% so that the entire balance of the employee's paycheck is deposited into the account.
- Skip prenote - A prenote involves a zero-dollar test deposit in order to validate that the bank account is set up correctly. It takes approximately three days for Empeon to run a prenote after an account is added or changed. If payroll is run before the three-day period, a physical check will be provided to the employee.
- Deposit explicit amount - On records where a flat dollar amount is selected as the amount, this setting will appear to determine whether the system should only deposit an explicit amount into the account. If activated, the direct deposit will only deposit the flat dollar amount that was entered, if the employee's pay is equal or greater than that amount. If the amount is less than the amounted entered, no deposit to this account will be made.
Additionally within this screen is the ability to attach a document file, which can be helpful if a voided check of direct deposit bank form is on hand for this employee.
Once all fields have been attended to, click "Save" to finalize the addition of this account.
Managing Multiple Deposit Deposit Accounts
When there are multiple direct deposit accounts that are set up, the order in which they are prioritized is crucial. It is important to understand that the numbers assigned to each bank account, represent the order in which the funds will be deposited and then subjected to the remaining balance. This means that the bank assigned to number one, will receive the first portion of funds from the employee's paycheck followed by the second bank account, and so on.
In the example shown in the screenshot above, the first account will receive 15% of the employee's paycheck deposited into that account. The second account will then receive 25% of the remaining balance which is technically 25% of the remaining 85% that is left after the first deposit. The third account will then receive 100% of the remaining balance after the first two deposits.
One of the biggest misconceptions with multiple bank accounts that are set up to deposit based on percentages, is that each account must have the percentages that add up to equal 100. In reality, the percentages assigned to each bank account are being applied to the remaining balance as it goes from one account to the next. This is why any time there are multiple accounts that are set up, the last remaining account should always be set to 100% so that it receives 100% of the remaining balance.
In this next example, there is a combination of direct deposit bank accounts set up with fixed dollar amounts and percentages:
In this example, the first account will received a flat dollar amount of $125.00 from the employee's paycheck deposited into that account. The second account will then receive 37.5% of the remaining balance after the first deposit, and then the third account will receive 100% of the what is left after the first two deposits.
As a Workforce User maintaining this information, if the bank accounts are ordered incorrectly based on the employee's preference, use the drag handler button to re-order the bank accounts accordingly.
For employers with the Direct Deposit request type made available to their employees, this grants their employees access to be able to add, edit and delete their direct deposit information at any time using their ESS Hub. When employees have access to manage their own direct deposit details, it is recommended to establish an approval process with an "Assignee" to verify that any changes made are accurate.