unclaimed paycheck becomes a donation

blw

My controller wants to know if we can implement a policy that states something to this effect: Paychecks and A/P reimbursement checks become donations to our organization (a non-profit agency) after two notifications from us to please cash their checks! The notification would probably be one or two months afer the check is delivered and then another month after that. What do you all think? The amounts range from $10 to $150. How do you handle checks that are never cashed?

Betty I_O

There are statutes of limitations, so you should check your own State laws before proceeding with what is being proposed by your controller. The way we handle uncashed payroll checks is if a paycheck remains uncashed (after notification to the employee) after three months, a stop payment is put on it and it is reissued. If another three months pass without cashing, a stop payment again is put on the (reissued) check. Our State law also dictates that any wages remaining unclaimed by an employee for more than three years are presumed to be "abandoned property." As an employer, we are required to file a report on or before each November 1 of each year with the Treasurer and Receiver General of our State (Massachusetts).

System

Not knowing the educational level of your controller, I'm surprised that he suggests the company can automatically reclaim uncashed checks paid as wages. Surely he is dreaming. Betty's response seems to be a more serious/legal application of the laws regarding uncashed checks. Every company check I've ever seen indicates something like "Void if not cashed within xx days". But, even at that, there are laws regarding who ultimately enjoys the proceeds.

NaeNae55

In many states you are required to turn the funds over to the state as unclaimed property. Your controller needs to do some more research before taking the step of deciding you can keep the money as a donation.

Good luck!