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Employee Paycheck Stolen, Deposited

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COH Manager

Junior Member
What is the name of your state (only U.S. law)? California

An temporary employee at the small business I operate came to me claiming he had lost his paycheck. No problem, I said, I'll call the payroll company and have them stop payment on it and issue a replacement. However, when I contacted the payroll company, it turned out the check had been cashed two days after it's date of issue. It was deposited into a Wells Fargo account. I retrieved a copy of the check from the payroll company - the employee's name isn't even spelled right on the endorsement. Why Wells Fargo honored the check I have no idea. Wells Fargo, the payroll company, the bank the check was drawn on (BofA), the police - no one seems very interested in resolving the issue.

What is the business's obligation to the employee? I can't 100% verify whether the check was stolen from here or not - I had always been in the practice of putting the paychecks with the empoyee's timecards (this practice has ended). I'm pretty sure the check was stolen after the employee picked it up - he said he thought it was in his backpack. I feel for the employee - I know he doesn't have a lot of money, and it hurts him to be out around $500 for a stretch. It hasn't helped that the payroll company give me bad information, (saying they would take care of the fraud investigation and reissue the check within 72 hours - which was completely untrue, they only do so in the check is uncashed). It's realy kind of strung me and the employee along. At the same time, I can't just give employees $500 because they say someone else cashed their check - it's a dangerous precident. I mean, how can I know for sure he isn't pulling a scam? At what point do I write him a check and either assume responisiblity for recovery or write it off?
 


Antigone*

Senior Member
What is the name of your state (only U.S. law)? California

An temporary employee at the small business I operate came to me claiming he had lost his paycheck. No problem, I said, I'll call the payroll company and have them stop payment on it and issue a replacement. However, when I contacted the payroll company, it turned out the check had been cashed two days after it's date of issue. It was deposited into a Wells Fargo account. I retrieved a copy of the check from the payroll company - the employee's name isn't even spelled right on the endorsement. Why Wells Fargo honored the check I have no idea. Wells Fargo, the payroll company, the bank the check was drawn on (BofA), the police - no one seems very interested in resolving the issue.

What is the business's obligation to the employee? I can't 100% verify whether the check was stolen from here or not - I had always been in the practice of putting the paychecks with the empoyee's timecards (this practice has ended). I'm pretty sure the check was stolen after the employee picked it up - he said he thought it was in his backpack. I feel for the employee - I know he doesn't have a lot of money, and it hurts him to be out around $500 for a stretch. It hasn't helped that the payroll company give me bad information, (saying they would take care of the fraud investigation and reissue the check within 72 hours - which was completely untrue, they only do so in the check is uncashed). It's realy kind of strung me and the employee along. At the same time, I can't just give employees $500 because they say someone else cashed their check - it's a dangerous precident. I mean, how can I know for sure he isn't pulling a scam? At what point do I write him a check and either assume responisiblity for recovery or write it off?
With regards to the cashed paycheck, whomever issued the paycheck needs to file a check fraud claim with the bank. Through the check fraud investigation, the bank will retrieve the funds from the account to which the funds were deposited. This is the only way the payroll account is going to be made whole. If your payroll company manages the funds then they file the fraud claim. If your company's payroll account is used, then you file the fraud claim.

Your employee clearly has not been paid and needs to be paid right away.

Hope this information helps. take care, ana
 

COH Manager

Junior Member
Thanks for your response, ana. The payroll company, ADP, pulls the money out of our BofA account and prints and issues the checks drawn onto their BofA account. But ADP says their obligation ends with the check getting cashed - in their eyes, the employee has been paid. I'm stunned they don't seem to have a better mechanism in place.
 

TinkerBelleLuvr

Senior Member
I retrieved a copy of the check from the payroll company - the employee's name isn't even spelled right on the endorsement.
Do they have bank tape of WHO cashed & deposited the check?

When a check was "washed" from our operating account, the dumb-dumb cashed inside a bank where they had a video camera of the person who did it. Do they have the person who deposited this check on tape? The bank can help in this situation; it has to be a signer of the checking account to get the investigation going. In addition, a police report will have to be made on the situation.
 

COH Manager

Junior Member
Do they have bank tape of WHO cashed & deposited the check?

When a check was "washed" from our operating account, the dumb-dumb cashed inside a bank where they had a video camera of the person who did it. Do they have the person who deposited this check on tape? The bank can help in this situation; it has to be a signer of the checking account to get the investigation going. In addition, a police report will have to be made on the situation.
It was DEPOSITED into a Wells Fargo account, and done at a teller. There's an obvious paper trail, and I'm sure it was on camera. Which signer has to get it going? BofA referred me to the payroll company, but they told me they "aren't a financial institution."
 

TinkerBelleLuvr

Senior Member
The employee has to file a police report.

A signer on the checking account that the money was drawn from needs to deal with getting the money returned to the checking account. If I was a nice employer, I would "loan" the employee the net amount until this can be cleared.

This is the time that having a good relationship with your branch manager works. :D:D
 

cbg

I'm a Northern Girl
Thanks for your response, ana. The payroll company, ADP, pulls the money out of our BofA account and prints and issues the checks drawn onto their BofA account. But ADP says their obligation ends with the check getting cashed - in their eyes, the employee has been paid. I'm stunned they don't seem to have a better mechanism in place.
Do not get me started on the issues I have had with Another Damned Problem.
 
Since the employee hasn't been paid, he has a beef with you, and you must pay him.

Since you have a contract with ADP to pay your employees, you have a beef with ADP, and ADP must cut another check.

Since the forged check was drawn on ADP's BofA account, ADP has a beef with BofA, and BofA must reimburse ADP.

Since BofA accepted a forged check from Wells Fargo, BofA has a beef with Wells Fargo, and Wells Fargo must reimburse BofA.

Since Wells Fargo accepted a forged check from a crook, Wells Fargo has a beef with the crook, and the crook must reimburse Wells Fargo. Good luck in catching him Wells Fargo...next time demand ID!

That's the way it works. So far as you are concerned, you need to pay your employee and ADP should cover the amount owed (of course, I'm assuming your contract doesn't specify otherwise).
 

COH Manager

Junior Member
The employee has to file a police report.

A signer on the checking account that the money was drawn from needs to deal with getting the money returned to the checking account. If I was a nice employer, I would "loan" the employee the net amount until this can be cleared.

This is the time that having a good relationship with your branch manager works. :D:D
I try real hard to be a nice employer, but I have to make sure I don't get taken advantage of. I am going to send the employee a new check, and go into our BofA branch and see what I can get resolved. The employee did file a police report - I'd think they'd be more interested in it, really - this can't be the only time these people have done it, there's an obvious paper (and camera) trail, and it probably involves someone who works at Wells Fargo, too. Once he gets paid, though, it will likely be hard for me to motivate him to help resolve it.
 
Cameron - ADP is only the PROCESSOR of the paychecks. This employer is the responsible party of the checking account.
The forged check was drawn on ADP's account, not on the OP's account. The reason ADP issued a check from its account is because of its contract with the OP, and the fact that OP paid ADP from his account.

The OP is correct to go after ADP, who must honor the contract (and the fact that it took OP's money) by paying his employee.
 

pattytx

Senior Member
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.
 

Antigone*

Senior Member
I do have to agree with Cameron here. I see the ADP debits all the time. ADP issues an ACH debit to the company's payroll account and cuts their own checks.

The employee never got benefit of the check issued to them. This is check fraud. The actual account the check was drawn on belongs to ADP, hence 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.

The OP does owe the employee their pay check immediately. I would also have to say that if it were me (and I hate ADP - I've seen them screw up over and over again), I would be on the phone with my ADP rep and if they didn't make it right with my company, my next phone call would be to another payroll company.
 
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pattytx

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.

If the OP wants to advance the net pay to the employee, he/she may do that. Or they may request ADP cut another check (if that is in their agreement) but you can bet ADP will charge the employer for that net AND the taxes (assuming ADP is also impounding/filing taxes). Either way, the OP will be out those funds until ADP's bank investigates the fraud and refunds the amount to the employer. The contract is between ADP and the employer. Not ADP and the employee. Not the employer and Bank of America.

And again, the way to have avoided this altogether was direct deposit or at least having the employee sign for his check, since the OP states they aren't positive where the check went awry. 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.
 
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cbg

I'm a Northern Girl
Heaven knows I've had enough trouble with ADP so that I'd love to hold them responsible. I have ADP stories that would curl your hair, as my husband would say.

However, this is neither ADP's fault nor responsibility. And trust me, if there were any way I could blame it on ADP, I would.
 
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