Following the recent amendment passed by the Pennsylvania Legislature concerning direct deposit, the Bureau has issued a new direct deposit authorization form, which you can access by clicking here. You must begin using this form no later than December 30, 2025.
Key points of the amendment include:
- Providing the Form - You must provide the employee entitled to compensation with the authorization form or direct them to access it online.
- Submission by Employees - Employees are responsible for submitting an accurate and valid authorization form, either electronically (with your agreement) or in another accepta-ble format.
- Temporary Paper Checks - If an employee does not submit the authorization form within 30 days of being notified about direct deposit requirements, you must temporarily issue payments via paper check.
Employees may change the account designated for receiving compensation or discontinue di-rect deposit by submitting a new authorization form. Note that:
- Account changes are limited to twice per year, unless a workers’ compensation judge or court orders otherwise.
- Requests for direct deposit, account changes, or stopping direct deposit must be processed within 45 days of receiving a valid authorization form.
Summary of the Amendment
On October 22, 2024, the Pennsylvania Legislature amended the Workers’ Compensation Act to permit or require direct deposit for workers’ compensation benefits. This amendment became effective on December 30, 2024 and all insurers or self-insured employers must offer direct deposit, as an option to employees entitled to compensation no later, than December 30, 2025.
Important details to remember:
- Notification Requirement — Employees must be notified of the option or requirement for direct deposit either immediately or alongside the Notice of Compensation Payable.
- Alternative Payment for Unbanked Employees — If an employee does not have a bank account, payments must be issued via paper check.
- Account Control — Employees must have control and signatory access to the deposit account, which must be held with a legally defined financial institution.
- Payment Limitations — Compensation cannot be split between multiple payment methods or deposited into multiple accounts.
If funds are deposited into an incorrect account due to an employee's error, you are not responsible for repaying the money. However, you must take “reasonable actions” to recover the funds, and any recovered money will be credited to the employee.
Exceptions and Additional Notes
- Lump Sum Settlements - These may still be issued via paper check unless you agree to process the payment via direct deposit.
- Short-Term Claims - Paper checks may also be issued if the claim has an expected duration of 60 days or less.
While the new directive remains silent on the consequences of failing to abide by this new di-rect deposit rule, we encourage prompt and diligent cooperation with these new requirements. Failure to comply may result in a violation of the Act and subsequent penalties. Should you have any questions about this new law and compliance with it, please do not hesitate to contact us.
.png)
