Do you know what to do with unclaimed checks?

It may seem highly unlikely, but the problem of what to do with unclaimed checks that are un-cashed by employees is an ongoing payroll problem.

GetPayroll Payroll Academy Blog for February 2017. Photo - Writing Check at Desk

The problem arises after
an employee:

  1. is discharged or resigns and fails to pick up or claim any wages owed,
  2. s/he does not cash a check for whatever reason, or
  3. a direct deposit is returned and never reclaimed by the employee.

Did you know that state abandoned property laws also apply to an employee’s pay?

According to state abandoned property laws, unclaimed wages become a form of “abandoned property” that the employer must pay over to the appropriate state treasury agency if they remain unclaimed for a certain number of years. The state abandoned property laws governing abandoned property are known as escheat laws. The property “escheats”, or reverts, property to the state or some agency of the state. Every State does this.  E-v-e-r-y State!

Contact your employee and document it.

Most states require employers to contact employees in an attempt to keep unclaimed wages from becoming abandoned property. They are also generally required to file annual reports with the state that include each employee’s name, last known address, amount and payment date of the unclaimed wages, and the date of the last contact with the employee. With that report, the wages need to be sent to the State Treasury which will “hold on” to the money indefinitely for the individual. Some States put a minimum level such as $50.00, below which the unclaimed wages does not have to be reported or sent to the State.

As an employer, your responsibility for paying those wages is over when you have submitted those funds and complete information to the State.
GetPayroll Payroll Academy Blog for February 2017 - Photo of check

Locating monies.

We have all seen the advertisements for companies that promise to locate any money that is yours which is being held by the State. Don’t bother paying for it. Each year most States will print a listing of names that the State has property belonging to in the local newspaper. This is all available to anybody at no charge in this day and age. 

Each State maintains a list of unclaimed property including uncashed paychecks. You can go online to the list for every State you have ever lived in and check to see if your name is there and the State has money which belongs to you. The site will have a procedure by which you prove you are that individual or heir and then the State sends you the money. If your parents or anyone that you are heir to is deceased you can check to see if there were any bank accounts that the executor of the estate missed out on.

When do unclaimed wages become abandoned?

Here is a list of escheat laws for each state. To drill down on the law for your state, search Google with the phrase “Escheat Laws + [your state].

 
GetPayroll Payroll Academy Blog for February 2017 - Photo: All States Unclaimed Wages Abandonment Chart
 

 

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