The Advantages of Direct Deposit and Paperless W-2s

There are many advantages to direct deposit and paperless W-2s for both employers and employees. Below, we cover several of these advantages and discuss how you and your employees can access direct deposit and paperless W-2s in the RUN Powered by ADP® (RUN) platform. 

Direct deposit

Direct deposit allows employers to electronically transfer employees' net pay into their bank accounts, eliminating the need for employees to receive a paper check. Direct deposit can result in the following advantages for employers and employees.

Employers

Direct deposit offers numerous benefits for employers. Here are some key areas to know:

• Save time and money. The time and money spent on printing, mailing, reconciling and reissuing paper paychecks can add up. Going paperless eliminates the need to hand out paper checks or wait for payroll delivery.
• Improve productivity. If employees are using their lunch or rest breaks to cash or physically deposit their paycheck, they may be late returning to work and/or may not be getting the full benefit of their meal or rest period.
• Gain more predictability. With direct deposit, employers know when the funds will be withdrawn from their account, which helps offer more predictability for helping to ensure that enough funds are available for payroll, and to pay other expenses, such as rent or utilities.

Employees

For employees, direct deposit has some great benefits. For example, direct deposit:

• Eliminates the need to go to the bank to deposit their paycheck, which can cut into a meal or rest period.
• Typically provides access to deposited funds faster and on a more predictable schedule.
• Allows employees to conveniently distribute their paycheck into multiple accounts, such as checking, savings and retirement accounts.
• Removes the need for employees to pick up their paycheck when they are on vacation or otherwise away from the office.

In a majority of states, direct deposit is permitted only if the employee voluntarily authorizes it. Typically, the employee's consent must be in writing. While a few states permit mandatory direct deposit, states often list exceptions to the requirement. Employers should check their state law for compliance. Employers should also evaluate whether a mandatory direct deposit policy would disproportionately exclude members of a protected class, and if so, offer other options for the receipt of wages.

If you use the RUN platform, you can allow your employees to update their own direct deposit information via Employee Access®. And employees can find Employee Access on the ADP mobile app, making it really convenient for them to use.

Paperless W-2s

Employers must complete, file with the Social Security Administration, and furnish to employees a Form W-2 (Wage and Tax Statement) that shows the wages paid and taxes withheld for the year for each employee. 

Employers may furnish paperless W-2s to employees, provided certain steps are taken. Each employee participating must consent (either electronically or by paper document) to receive their W-2 electronically, and you must notify the employee of all hardware and software requirements to receive the form. You may not send a W-2 electronically to any employee who doesn't consent or who has revoked consent previously provided.

Want to set up paperless W-2s?

If you are a RUN client, the leaf icon in the top right of your RUN account displays for clients who are eligible for Paperless W-2s. If you see this in RUN, you are eligible.

To determine if your account is already set up for paperless W-2s in RUN, simply click the leaf icon in the top right of your RUN account. If you see the option to sign up, your account is currently NOT set up for paperless W-2s.  

Now, how do you sign up for Paperless W-2s from inside RUN?

• From RUN, click on the Paperless leaf icon from the Home page banner.
• Click Sign Me Up.
• An email confirmation and Home page message is then sent to you. 
• An email notification is sent to employees to consent to receive paperless W-2 tax statements in Employee Access.
• Employees then need to opt in or opt out for paperless in Employee Access.

If you do choose paperless W-2s in RUN, here is what to expect:

• You get worry-free W-2 distribution by January 31. 
• Employees will be able to view and download their W-2 through Employee Access as soon as W-2s are available, versus waiting for the paper copy that must be sent by the employer to the employee. 
• Employees are required to consent to paperless to access their W-2 electronically online. 
  • If an employee chooses to not opt in for a paperless W-2, your company is still obligated by law to provide that paper copy to the employee. 
• An employee can activate the paperless tax statement option in Employee Access.

Conclusion

Consider whether direct deposit and paperless W-2s make sense for your business and employees.