Payroll Articles

Unclaimed Checks
Escheat Laws

It may seem highly unlikely, but the problem of what to do with unclaimed checks that are uncashed by employees is an ongoing payroll problem. The problem arises where an employee is discharged or resigns and fails to pick up or claim any wages owed. According to state abandoned property laws, unclaimed wages become a form of "abandoned property" that the employer must pay over to the appropriate state treasury agency if they remain unclaimed for a certain number of years. The state abandoned property laws governing abandoned property are known as escheat laws, because the property "escheats" to the state.

Most states require employers to contact employees in an attempt to keep unclaimed wages from becoming abandoned property. They are also generally required to file annual reports with the state that include each employee's name, last known address, amount and payment date of the unclaimed wages, and the date of last contact with the employee. The following table shows the length of time before unclaimed wages become abandoned property in each state.