Uncashed paychecks can be tricky and a source of tedious work. You can’t just void them and forget about it. Same is true for other company written checks such as employee commissions, accounts payable, dividends, vendor payments, refunds and travel expenses.
The amount of net pay continues as a company liability indefinitely. You must try to contact the employee by phone, letter or e-mail. Keep copies of returned mail and any contacts made in reference to the check. The check will now become “unclaimed property” and as such, is protected by state laws.
Each state has specific rules that detail the required steps to be taken by an employer. The rule of thumb is that uncashed paychecks with payee information must be submitted or “escheated” by the end of a three year period from the paycheck date. Typically you’ll file the report of unclaimed property to the state of the property owner’s last known address.
These are called “escheat” laws. The funds are held in escrow accounts and can be paid to the original payee or their heirs if a valid application for the funds is presented. This is what the web sites for “found money” look for.
Visit the website or call your state’s Treasurer’s office for specific guidance.