Unclaimed Paychecks: Escheatment Trends & Best Practices
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Gain a clear understanding of what is encompassed under unclaimed property as it relates to payroll and how to avoid legal pitfalls of unclaimed checks.When checks and other types of instruments are provided to employees for the payment of wages, bonuses, or reimbursements, or to other vendors as compensation for personal services, are not cashed or utilized; payments are not made when due or are issued in the correct amounts; or checks and instruments are lost and replaced, businesses many years later may be subject to audits that result in substantial liabilities under state unclaimed property and escheat laws. These laws are often enforced on behalf of states by contingent fee auditors who will scrutinize records for errors and omissions over a 10-to-15-year period and utilize statistical projections to determine amounts not paid to states when due. Many states add punitive rates of interest of up to 12% to the amounts determined to be due and may also add civil penalties. This topic will help managers of payroll and human relations departments and other company personnel and consultants understand the purpose of unclaimed property and escheat laws; what their obligations are under these laws; how to determine to which states reports must be filed and unclaimed property remitted; when reports must be filed, and payments made; and how to reduce exposure for liabilities under these laws.
AuthorsRaymond P. Pepe, K&L Gates LLP
What Are Unclaimed Property and Escheat Laws?
What Types of Property Are Subject to Unclaimed Property Laws?
What Obligations Do Unclaimed Property Laws Impose on Holders?
Which State Is Entitled to Take Custody Over the Property of a Holder That Is Presumed Abandoned?
How Do Unclaimed Property Laws Vary Among the States?
The 2016 Version of the Uniform Act
Impact of Regulation E on the Use of Payroll Cards