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Escheatment

edited August 2010 in General Payroll Topics
We currently have an outside vendor produce our payroll checks. Back in Jan 10' I implemented that the checks needed to be valid for 90days.

When payroll is processed the vendor takes the money from "our" account to cover the payroll checks.

My question is if the check was dated Jan 1 and is void March 31 should the vendor automatically return the funds back to our account? What is the best way to keep track of this?

Comments

  • rrupertrrupert ✭✭✭
    And based on personal experience, it often depends on the teller who receives the check as to whether they notice the 90 days or not. And then the bank's policy and state/federal banking laws. I agree with DAW that it is more complicated.

    side topic: Would you believe I had 4 payroll checks for employees clear the whole banking system with no signature? Amazing that no one noticed (or should I say no machine noticed?)! If they can't notice that, I am not sure they would notice "void after 90 days" in very small print!
  • I guess I did not pose the question correctly. It was more around the vendor who processes our payroll versus the bank cashing the check.
  • With our vendor we have the following arrangment:
    - Checks are issued off of the vendor account
    - We wire them the value of the checks
    - If a check goes stale, we are notified and the net pay is returned to our account
    - We then try to track down the employee to return the funds
    - If we cannot locate the employee with follow the state specific escheatment rules

    I guess I have two questions:

    1) have you read your contract, what does it say about stale checks?
    2) have you called your vendor, what did they say about stale checks?

    Best way to track. Monitor your accounts, the vendor should be taking exactly the amount of the checks. If something is off, then time to pick up the phone and call the vendor to provide support for the difference.

    Which vendor are you using? I've worked with quite a few.
  • Teller look at the check to see if it is signed? Hey, I can now make deposits to my account at the ATM without an envelope - it is scanned for the amount, etc. Not sure that it verifies my endorsement on the back. Goes right into my account and is available before it would be if I went to the teller.

    Direct deposit and payroll cards look better all the time.
  • Not sure that it verifies my endorsement on the back.

    Direct deposit and payroll cards look better all the time.

    Patrick.. I can tell you from experience.. the endorsement is NOT verified.. I accidentally deposited 4 checks without signing any of them through the ATM and there were no issues!
  • the endorsement is NOT verified.. I accidentally deposited 4 checks without signing any of them through the ATM and there were no issues!

    Actually, there probably would not be any issues so long as the check is deposited to the account of the payee on the face of it. I send my rent checks, payable to my landlord, to his credit union (in the US - the landlord is overseas and sometimes the check would take a month and a half to clear - it was driving me nuts) - I don't send it blank, but put "for deposit only" to his account where the endorsement would go. When I worked at a savings and loan, each teller had a rubber stamp that read "Deposited to the account of the within named payee". And I deposit my wife's checks to her account regularly without endorsement.

    So, I can see where the ATM which might recognize your name on the face of the check, might not be terribly concerned about the endorsement so long as it is going into your account.

    On the other hand, I had reason to recall the story I heard many years ago about the man who put the deposit slips from his check book into the blank deposit ticket tray at the bank - and lots of people deposited checks to his account.

    That is almost as bad as the guy who traveled all over the US using travelers checks - I think American Express - whenever he started to run short of cash, he would go to the local library and cut out a few of travelers checks out of the back covers of The National Geographic - people cashed them.
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