Is it Illegal to Issue Payroll Checks Without Funds?

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Employers may be open to prosecution for knowingly issuing bad checks.
Employers may be open to prosecution for knowingly issuing bad checks. (Image: Comstock/Comstock/Getty Images)

A feeling of dread may enter the pit of your stomach when you go to cash your payroll check and the check is returned with insufficient funds. If your employer knowingly issues a check with insufficient funds, he may be subject to bad check laws in your state. To initiate a legal case against your employer, you must contact a local corrections office or the district prosecutor.

Features

Although writing a bad check is typically only a misdemeanor, large payroll checks may be tried as a felony. Each state has different laws on what amount constitutes a misdemeanor or payroll. On average, the amount must exceed $500 to $1,000, according to the National Check Fraud Center. Also, post-dated checks do not fall under the laws regarding bad checks since they are viewed as a promise for future payment.

Time Frame

However, if the employer provides the funds within a reasonable time frame, it is typically not considered a crime. According to the Commercial Collection Agency Association, check writers have an average of five to 30 days to honor the check to avoid prosecution.

Considerations

If the employer thought enough funds were available, he is not subject to bad check laws. It has to be proven that he knowingly issued the check when not enough money was available to cover the amount. The check signer is typically held accountable for the bad check. However, payroll companies and accountants are not liable for bad checks issued.

Amount

In case you decide to prosecute, the amount of the check is typically awarded as a result of litigation. In most states, along with the past due amount, you may collect court and legal costs associated with the suit from the writer of the bad check. Damages in states such as Indiana, North Carolina and New Jersey must not exceed $500, according to the National Check Fraud Center.

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