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Employee Paycheck Stolen, Deposited

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eerelations

Senior Member
Once the employee has the check in his hand, the employer doesn't have to jump through hoops to replace it if it is stolen; even the DLSE would not require that.
So true. The OP seems to have forgotten that it's the employee that lost the cheque, not the employer or ADP.
 


Antigone*

Senior Member
The OP can yell and scream and ADP all they want. ADP is NOT responsible to issue a replacement check if they do not have the funds to do so. And they won't until the investigation is completed. If either of the responders who think so have ever read an ADP contract, they would know that. ADP is NOT going to refund the amount to the employer until the money is put back into THEIR checking account so they can then refund it to the employer. Ain't gonna happen.
That is exacty why I said this: "ADP must file the check fraud claim. ADP will then be reimbursed for the fraudlent item making them whole, and should reimburse the employer making them whole."

CBG is that why I've got curly hair:confused::eek::confused:. I'm on the screaming end of the phone all the time with clients mad at ADP. All I can tell them is that they hold the power - process payroll another way.

take care, ana
 

pattytx

Senior Member
Ana, I wasn't responding to you, I was responding the the posters who said otherwise. We agree. And yes, I am also in Payroll. Over 15 years as a Payroll Manager; I am not a novice here. ;)
 
ADP has no legal responsibility to the employee. ADP's contract is with the company, not the employee; the employee works for the employer, not for ADP. As a payroll manager for many years for several very large employers, here's what has to happen.

1. Employee files police report.
2. Employer send police report to ADP (since the checks were cut on ADP's account, from what I understood from the OP)
3. ADP files an affidavit of forgery with their bank.
4. Their bank investigates and, at some point in the future, the bank will release the funds back to ADP.
5. ADP will refund the monies to the employer's bank account.

Now, the employer can choose to front the money to the employee and, depending on the reliability of the employee, I have done that in the past, with a properly executed repayment or deduction agreement.

Here's the problem you, as the employer, may have. If you can't show that the employee actually got the check (for example, you don't have employees sign for the release of their paychecks), and the employee files a claim for unpaid wages, you would probably be ordered to pay. Of course, by that time I can pretty much guarantee you that the whole process as described above will have been completed; wage claims, especially in California, do not get resolved overnight.

Horse out of the barn now, but best practice is to have employees sign for their paychecks. Even better practice is to really push direct deposit and I'll bet the employee will see the advantage of direct deposit now.
The employee wouldn't file a police report since he's not the victim of any crime. He has a civil dispute with the OP.

Also, requiring the employee to sign for his check will not relieve the OP of his obligation to provide a new check if the first check is forged and cashed.
 

eerelations

Senior Member
The employee wouldn't file a police report since he's not the victim of any crime. He has a civil dispute with the OP.
I don't understand this - someone stole the employee's paycheque from the employee. How come the employee isn't a victim of a crime? If someone stole the employee's watch, the employee would be the victim of a crime...how does the fact that it's a paycheque make it any different?

And how come it's the OP's fault? If it was a watch that was stolen, it wouldn't be the OP's fault...

The OP did what he was supposed to do here - he gave the paycheque to the employee. Once that was done, it became the employee's responsibility to take care of said paycheque.

(Hell, I give paycheques to employees all the time...what am I supposed to do after I give them their paycheques, follow them around to make sure they don't get mugged or otherwise lose said paycheques on their way to the bank?)
 

Antigone*

Senior Member
Ana, I wasn't responding to you, I was responding the the posters who said otherwise. We agree. And yes, I am also in Payroll. Over 15 years as a Payroll Manager; I am not a novice here. ;)
Hello Patty, I'm sorry I didn't mean to offend you and I know you're no novice. I'm actually not in payroll but I am one of the bankers many payroll people call when they have problems.

I do have empathy for people in your role. Dealing with whining employees on a daily basis is not something I find pleasurable.

Have a great day and take care, ana:)
 
I don't understand this - someone stole the employee's paycheque from the employee. How come the employee isn't a victim of a crime? If someone stole the employee's watch, the employee would be the victim of a crime...how does the fact that it's a paycheque make it any different?
The paycheck wasn't stolen from the employee. The OP stated in the very first post that the employee lost the paycheck. The only crime that occurred, based upon the facts that the OP provided, was the forgery. The issuer of the check (ADP) is the victim of the forgery, not the employee.

And how come it's the OP's fault? If it was a watch that was stolen, it wouldn't be the OP's fault...

The OP did what he was supposed to do here - he gave the paycheque to the employee. Once that was done, it became the employee's responsibility to take care of said paycheque.
A debt is not paid when a check is issued; it is paid when a check is successfully cashed by the payee. In this case, the payee (the employee) never cashed the check, and therefore, the debt has not been extinguished. The result would be the same even if the employee admitted that he received the check.

(Hell, I give paycheques to employees all the time...what am I supposed to do after I give them their paycheques, follow them around to make sure they don't get mugged or otherwise lose said paycheques on their way to the bank?)
What you are supposed to do is pay your employee. A check is not payment; it is a promise of payment. If you don't want to risk that the employee will lose the check, then you should give him cash which is payment.
 

ecmst12

Senior Member
I don't think the DOL would see it your way. If the check was issued, received, and BOUNCED then the employee has not been paid. But if the check was issued, received, and lost or stolen when in the posession of the employee, that's not the employer's fault - they have done their duty. Employee should have taken better care of their paycheck.

But of course none of that is here nor there since employee didn't sign for the check, so the DOL might well order the employer to issue another check if it came down to that.
 
I don't think the DOL would see it your way. If the check was issued, received, and BOUNCED then the employee has not been paid. But if the check was issued, received, and lost or stolen when in the posession of the employee, that's not the employer's fault - they have done their duty. Employee should have taken better care of their paycheck.

But of course none of that is here nor there since employee didn't sign for the check, so the DOL might well order the employer to issue another check if it came down to that.
It doesn't matter how the DOL sees it. What matters is what the law states, and it states that a debt is not discharged when a check is given, but only suspended until the check is paid or dishonored. If the check is lost, then the payee can still enforce the check by proving its terms and paying the stop check fee (if applicable).

Therefore, in this case, if the OP refused to pay the employee, then the employee could sue and win by proving that a check was given to him for a certain amount of money, and that the check was lost.
 

ecmst12

Senior Member
Employee: Your honor, they gave me a check and I lost it and they won't give me another one until the fraud investigation is done to find out who cashed it!

Employer: The check cleared our account, as far as we know, the employee cashed it, until the outcome of the fraud investigation is known. We can't issue a new check until the bank tells us they believe it to be fraud.

Judge: You should have taken better care of your check, case dismissed.

As far as the company knows, they issued the check and it was cashed. Until the fraud investigation is done and the financial institution is satisfied that it was cashed fraudulently and refunds the money to the company, they can (as far as I can see) consider the debt paid. When the company gets the money back, obviously they then will have proof that the debt is not paid and can issue a new check. The check was CASHED, they can't simply issue a stop payment and print a new check.
 
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Employee: Your honor, they gave me a check and I lost it and they won't give me another one until the fraud investigation is done to find out who cashed it!
Is doesn't matter who cashed it as long as it's not the payee.

Employer: The check cleared our account, as far as we know, the employee cashed it, until the outcome of the fraud investigation is known. We can't issue a new check until the bank tells us they believe it to be fraud.
The bank doesn't get to make that decision.


Judge: You should have taken better care of your check, case dismissed.
That ruling is counter to the law.

As far as the company knows, they issued the check and it was cashed. Until the fraud investigation is done and the financial institution is satisfied that it was cashed fraudulently and refunds the money to the company, they can (as far as I can see) consider the debt paid. When the company gets the money back, obviously they then will have proof that the debt is not paid and can issue a new check. The check was CASHED, they can't simply issue a stop payment and print a new check.
You clearly don't understand the law that regulates negotiable instruments.

Overall, that was a strange and silly post.
 
And you clearly don't understand payroll law.
Right. Tell you what, why don't you cite the "payroll law" that states that banks get to make the determination about whether fraud occurred, and which also states that when an employee loses a check, he's out of luck unless the bank decides otherwise and credits his employer's account. I'd love to read that provision of law.

In the meantime, here's the law that backs what I've written:

§ 3-309. ENFORCEMENT OF LOST, DESTROYED, OR STOLEN INSTRUMENT.

(a) A person not in possession of an instrument is entitled to enforce the instrument if:

(1) the person seeking to enforce the instrument

(A) was entitled to enforce it the instrument when loss of possession occurred, or

(B) has directly or indirectly acquired ownership of the instrument from a person who was entitled to enforce the instrument when loss of possession occurred;

(2) the loss of possession was not the result of a transfer by the person or a lawful seizure; and

(3) the person cannot reasonably obtain possession of the instrument because the instrument was destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unknown person or a person that cannot be found or is not amenable to service of process.

(b) A person seeking enforcement of an instrument under subsection (a) must prove the terms of the instrument and the person's right to enforce the instrument. If that proof is made, Section 3-308 applies to the case as if the person seeking enforcement had produced the instrument. The court may not enter judgment in favor of the person seeking enforcement unless it finds that the person required to pay the instrument is adequately protected against loss that might occur by reason of a claim by another person to enforce the instrument. Adequate protection may be provided by any reasonable means.
 

ecmst12

Senior Member
The court may not enter judgment in favor of the person seeking enforcement unless it finds that the person required to pay the instrument is adequately protected against loss that might occur by reason of a claim by another person to enforce the instrument.
Hmm, that actually supports what *I* said. The employer is entitled to make sure that they will get the funds back from the bank that were paid out due to fraudulent transfer, before they have to issue a new check. That sounds like adequate protection to me.
 
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