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Do Direct Deposits Go Through On Holidays

author
Ava Flores
• Friday, 04 December, 2020
• 7 min read

With the federal holidays always around the corner, be prepared to answer the question, Do holidays affect direct deposit?” Paydays on holidays can wreak havoc on payroll processing and create uncomfortable situations between you and your employees.

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Contents

Here are some tips to make sure your payroll doesn’t put a damper on everyone’s holiday spirit. However, even if a bank is open, if the Federal Reserve is closed, there is no actual movement of money.

Although direct deposit is electronic, it cannot be processed on holidays due to the Automated Clearing House (ACH) following the same rules as the reserve. Since your employees will not be receiving their direct deposit on holidays, you’ll want to ensure you review your next scheduled check date for accuracy and alter the run date to accommodate the holiday if it needs to be adjusted.

Keep in mind that many employees take additional vacation days surrounding these holidays. Be Consistent If you decide to pay your employees the day before the holiday, it’s a good idea to continue to do the same all year.

If you decide to pay your employees before Thanksgiving Day, here is an example of how you could process your payroll. For direct deposit: If your check date falls between Thursday, Nov. 28 and Friday, Nov. 29, please consider processing your payroll early.

Our guidance is designed only to give general information on the issues actually covered. Consult your own legal advisor regarding specific application of the information to your own plan.

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Learn how to make sure your employees get paid on time when there’s a holiday. This means you need to submit your payroll before 5:00 PM PST 1 business day prior to payday with a 1-day lead time or 5:00 PM PST 5 business days before payday.

The money will be drawn from your account before regular banking hours the next business day. Make sure your account has funds to cover the payroll on the day before the draw takes place.

If your payday falls on a Monday holiday, approve your paychecks by the prior Thursday. Keep in mind that a Monday holiday will also affect a Tuesday payday.

Your employees will see the money by 5:00 PM local time per NACA rules. But if you approve your paychecks before 5:00 PM PST the business day before payday, we’ll process the direct deposit and debit your account the day before payday.

If your payday falls on a Monday holiday, approve your paychecks on the prior Friday by 7 AM PST. This means you need to submit your payroll before 5:00 PM PST 1 business day prior to payday.

deposits
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The money will be drawn from your account before regular banking hours the next business day. Make sure your account has funds to cover the payroll on the day before the draw takes place.

If your payday falls on a Monday holiday, approve your paychecks by the prior Thursday. Keep in mind that a Monday holiday will also affect a Tuesday payday.

You need to submit the payroll by 5:00 PM PST 2 business days prior to payday. The money will be drawn from your account before regular banking hours the next business day.

Make sure your account has funds to cover the payroll on the day before the draw takes place. If your payday falls on a Monday holiday, approve your paychecks by the prior Wednesday.

A Monday holiday will also affect a Tuesday and Wednesday payday. If you've missed the cutoff time, your direct deposit will process the next business day.

deposits pay gavl
(Source: www.gavl.com)

Although there are a number of ways to pay employees, most involve banks in some shape or form. As a result, a bank holiday can put a wrinkle in your payroll processing timeline and desired pay date.

If there’s a bank holiday at any point between your normal payroll processing day and payday, you might need to make adjustments. The Wednesday holiday could pose a problem to your employees getting paid on Friday because of processing times.

Payday falling on a bank holiday mostly influences direct deposit recipients. Not to mention, a whopping 82% of workers receive wages via direct deposit.

The Automated Clearing House (ACH) is the electronic network that handles direct deposit. The ACH only processes direct deposit transfers Monday – Friday.

When payday falls on a bank holiday, employees’ direct deposits are delayed a day. Again, when there’s a bank holiday any time between when you run payroll and the pay date, there’s a direct deposit processing delay.

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In the past, bank closures meant workers couldn’t cash their paychecks. Not to mention, banking apps have mobile deposit options for paychecks.

Even so, employees who receive paychecks might have some hurdles if payday falls on a bank holiday. As a result, your business might be closed on a bank holiday, preventing you from being able to hand the paycheck to your employee on payday.

And, many states have pay frequency laws, which regulate how often employees must be paid (e.g., at least twice per month). Not to mention, the U.S. General Services Administration’s payroll calendars show employees receiving their wages the day before a holiday.

If you want to pay employees before the holiday, run payroll one business day earlier than you normally would. That way, employees can receive their direct deposit the business day before the holiday.

You must submit payroll four business days before your employees receive their direct deposit. That way, you know when to collect timesheets and run payroll earlier than normal.

To further help you stay on track, some payroll software services send you an alert when there is a bank holiday (e.g., email). If you forget about a payday falling on a bank holiday, expediting the process could be your best bet if you want employees to receive their wages on time.

But, this typically adds fees to each direct deposit transaction you want expedited. Direct deposit helps simplify the amount of work you need to do when it comes to paying employees.

That way, you don’t need to worry about hand-writing a check each week or paying employees cash. Or, an employee can elect to receive wages via direct deposit.

Consider using online payroll software that offers free direct deposit. Your pay frequency will determine when you submit payroll and when employees will receive their direct deposit.

Depending on the direct deposit service you have, you will need to submit payroll by a certain day. A shorter period of time between when you submit payroll and payday will typically cost you more money.

Keep in mind that when direct deposit goes through depends on when the Federal Reserve System, and thus Automated Clearing House (ACH), is open. Make sure your employees know when to fill out their timesheets or enter their hours into their online time and attendance portal.

It might be beneficial to have them fill out their time cards by the same day each pay period. Give yourself enough time to go through and approve your employees’ timesheets before the deadline to submit payroll for direct deposit.

Need a payroll system that offers free direct deposit? With Patriot’s online payroll software, you have the option to pay employees via free direct deposit.

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