Limiting Employee's Checking Accts. to 3 OD Limit

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Question:

Our Bank is located in N.J.. This pertains to our own employees' checking accounts. We would like to limit our employees to a total of 3 overdrafts per year, after which they would need to close their accounts. Are we in any compliance situation if we implement this? My other question is not employee related. We have one business owner that is constantly overdrawn. We have put an automated cap on her account to only charge her 1 overdraft fee regardless of how many checks are present against insufficient funds. We normally charge per NSF check. We do not offer this to all customers nor have we advertised this. Are we in compliance with this?

Answer:

What you do with business accounts is not a compliance concern, although an examiner might raise a question of whether it's a safety and soundness issue. A business account that is constantly overdrawn isn't (in itself) good business, and there ought to be some very good compensating reason for this special treatment.

You are free to impose a stricter limit on overdraft activity for employees. Just make certain that it is evenhandedly administered, and clearly spelled out in your HR manual.

First published on BankersOnline.com 3/19/12