Unclaimed/Uncashed Paychecks

Unclaimed or returned paychecks are governed by state “escheat” (not federal) law. The checks become state property if not claimed by the owner within 1 to 7 years, depending on the state. All states and the District of Columbia have escheat laws that specify that state’s approved ways for disposing of abandoned property.

Employers holding unclaimed wages must report certain information to the state while they hold the funds. The report must be filed annually and display the following information:

· employee’s name,

· last known address,

· description of the abandoned property (“wages”),

· the date the wages became payable,

· the dollar amount involved, and

· the date of the last transaction with the employee.

Employers must make a reasonable effort to contact the employee to prevent wages from being abandoned and remain liable for unclaimed wages until paid or turned over to the state. Attempts to keep or spend unclaimed wages will result in penalties and interest.