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What happens to a former employee’s unclaimed paycheck?

On Behalf of | May 18, 2016 | Employment Litigation

Regardless of how an employee parts ways with your company in Texas, it is typical for the last paycheck to be issued a few days or even one or two weeks later. You must pay for all the hours that the employee worked to stay within the bounds of the law. However, if there is no direct deposit set up, and the employee does not come to get the check, you may be wondering whether you must hold it indefinitely.

According to the Houston Chronicle, at no point does the right to the employee’s unclaimed wages revert back to you. If the employee never comes to get it, you may report the amount of the check to the state as abandoned. Many companies take this step after three to five years, but your company can create a policy to deal with the situation in the way that works best for you. Once the account has been turned over to the state, your responsibility for it ends. The employee would have to prove his or her identity to the state in order to receive the money.

If the employee does show up after an interval of time, the original check may not be valid because many banks will not cash a check that is more than six months old. You must void the old document and issue a new one in this case. To avoid litigation, it is always best to do everything you can to ensure that the employee receives all wages that are due for the hours worked. This information should not take the place of legal advice, as it is provided for educational purposes only.


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