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ACH Client Responsibility Reminder

12/17/2018  |  By: Bobbie Ward, Office and Operations Manager, Employment Partners

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This notice is to remind you of your responsibility to fund your bank account at least three business days prior to any check date for which LBMC Employment Partners is to debit for employee direct deposit amounts.

Client Responsibilities with Regards to Third-Party ACH Processing

LBMC Employment Partners, LLC uses an electronic banking system, ACH, to collect funds from our clients and make payments (payroll) to their employees. As such, we are considered a Third-Party Service Provider (TPSP) and are governed by NACHA (National Automated Clearing House Association) guidelines. NACHA rules stipulate that any Third-Party Service Provider (TPSP) processing ACH (Direct Deposit) services must post a reminder of responsibility to clients on a regular basis.

Direct Deposit Service and Authorizations

Client authorizes LBMC Employment Partners to process EFT transactions for such amounts as are necessary to pay client’s employees, two banking days prior to the client’s check date. Such funds are to be held in an account established by LBMC Employment Partners until client’s check date, when funds shall be deposited to employee accounts as specified.

Additionally, as needed to guarantee employee deposits are received in employee accounts by payroll check date, client agrees that payroll data must be received in time to process and transmit ACH transactions two full banking days prior to payroll check date. In cases where the payroll being funded is beyond the normal limits established for the company, advance funding may be requested before processing occurs.

What Are the Client’s Responsibilities?

Client will: 

  • (a) complete and execute all required documentation so that LBMC Employment Partners, LLC may withdraw funds from Client’s Account to process direct deposit payrolls;
  • (b) input or report all relevant payroll data to LBMC Employment Partners no later than 2:00 p.m. two full banking days prior to each pay date;
  • (c) have available in Client’s Account good, collected funds in an amount sufficient for LBMC Employment Partners to cover the debits initiated by Employment Partners no later than the opening of business (i) two banking days prior to each pay date for debits by electronic entry, and (ii) two banking days prior to each pay date for funding by wire transfer; and
  • (d) compare all reports on credits or debits initiated by LBMC Employment Partners to Client’s records and promptly notify LBMC Employment Partners of any discrepancies. Client and LBMC Employment Partners may agree to alter certain of these responsibilities depending on Client’s needs and circumstances.

PEO Clients

As a PEO client, you are relieved of the responsibility for maintaining direct deposit requests for your employees. Along with other services included in the PEO offering, we maintain these for a period of two years, as recommended by NACHA rules, such that we can quickly respond to any discrepancy due to a return/reject by the receiving financial institution. LBMC Employment Partners, LLC will make any necessary changes to payee account information within six (6) banking days upon receipt of a Notice of Correction, a Notice of Change*, or before another entry is transmitted.

Payroll & HRO Clients

If you contract with LBMC Employment Partners, LLC to process payroll for your company, but you are not a part of the LBMC Employment Partners PEO, it is your responsibility under NACHA guidelines to maintain direct deposit authorization forms for each of your employees (for each account) for a period of two years. The originating and/or recipient financial institutions are authorized to request these authorizations at any time if there are issues with the receipt and/or rejection of funds. Maintenance of this form protects you under NACHA guidelines and allows us to make credit and debit entries in the event a payroll adjustment is necessary. NOTE: An authorization to debit an account must be in writing or ‘similarly authenticated.’

LBMC Employment Partners, LLC will make any necessary changes to payee account information within six (6) banking days upon receipt of a Notice of Correction, a Notice of Change*, or before another entry is transmitted.  However, the legal responsibility for response lies with you as the Originator of the transaction (payment).

The rules are different for returns. Returns must be processed by the receiving bank within 24 hours of settlement. Returns that are unauthorized beyond the 24 hours are your liability and any disputes may have to be settled outside of the banking network. If the Receiving Bank receives a dispute claiming a debit was unauthorized, they must get a signed Written Statement of Unauthorized Debit from the account holder/employee.

*Notice of Change

  • When ACH information is incorrect, a Notification of Change (NOC) is sent by the Receiving Bank requesting that future entries contain correct information. ACH Rules require that LBMC Employment Partners make the change within six (6) banking days of receiving the information from our financial institution, or before another entry is sent.
  • The Receiving Bank warrants that the information they provide to us is correct.
  • LBMC Employment Partners, LLC will notify Client of any NOCs received on your behalf.
  • LBMC Employment Partners, LLC may pass along any fines received based upon Client non-compliance.

Should you have questions or concerns regarding your responsibilities under NACHA, please connect with our team today or visit the NACHA website at https://www.nacha.org.