Unclaimed Checks in Unclaimed Checks in Your Payroll Department

If your payroll system is not set up with Direct Deposit then there is a chance that you have unclaimed checks being stored at your office. What do you do with those?

It is a good idea to have an Unclaimed Checks policy in your employee handbook. We list some suggestions for wording below.

1. Determine if the employee is entitled to the check.

2. Make a concerted effort to deliver the check.

3. Hold the check for two weeks.

4. Send check to state unclaimed property

5. If a check is returned after being mailed, specify a period of time where it will be held at the office for pick up before turning it in to the state.

Employers should keep a record of the employee’s name and last known address for a specific time period after the wages become reportable. After the specified time period has lapsed, sending the check to your state’s abandoned/unclaimed property department probably does your former employee a favor. Because many companies do not have a mechanism for holding on to unclaimed property for long periods of time, chances are that at some point the check would be lost or destroyed. However, while abandoned property laws vary from state to state, Washington’s state law *“protects unclaimed property until it can be returned. There is no time limit for filing a claim and rightful owners or their heirs can claim property reported since 1955. The state may auction the content of safe deposit boxes, however, if not claimed within five years.”*

Some other particulars of unclaimed property laws in the Pacific Northwest:

Washington:

  • Unpaid wages, including wages represented by un-presented payroll checks, owing in the ordinary course of the holder’s business which remain unclaimed by the owner for more than one year after becoming payable are presumed abandoned.*

Oregon:

  • Property becomes unclaimed if the owner can´t be contacted by the holder of the asset within a specified period of time. Examples of unclaimed property include savings or checking accounts, uncashed payroll or dividend checks, and safe deposit box contents.

  • Unclaimed money is held in trust in the Common School Fund forever for claim. The fund’s interest earnings benefit K-12 public schools through biennial distributions to Oregon’s 197 school districts.**

 

*Source – http://ucp.dor.wa.gov/aboutUCP.aspx

**Source – http://www.oregon.gov/dsl/UP/Pages/about_us.aspx

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Is there value in implementing paycards at work?

A paycard mimics the functions of a debit card and can reduce the hassle of paper check writing for an organization’s payroll department. Paycard usage is increasing as it becomes more challenging to cash paper checks and as businesses recognize the value in accepting electronic payments as opposed to a check. For organizations who are intent on streamlining their payroll process and reducing their paper consumption, paycards are an ideal suggestion for employees who do not have bank accounts and are not interested in direct deposit. According to NACHA, companies can save up to $3.15 per payment by using direct deposit instead of paper checks.* A company with 100 employees on paper checks can save nearly $19,000 a year by switching to direct deposit. Channeling our inner Letterman (except we’re serious!), we bring you:

Top 10 Reasons to Implement Paycards**

1. Seamless integration into your existing payroll system
2. Increase employee productivity
3. Protect funds
4. Prepare for the unexpected
5. Eliminate check delivery fees
6. Minimize stop payment exposure
7. Remove escheatment liability
8. Reduce check fraud
9. Empower employees
10. Go green—and reduce your carbon footprint

Employees also benefit from the use of paycards. Checks can be lost in the mail, while a paycard can be kept in a safe place or on one’s person at all times. Since direct deposit can be used to load a person’s earnings onto the card, the steps of receiving the check in the mail, locating identification, and taking the check to the bank to be cashed are all eliminated. As mentioned previously, there are workers who do not have bank accounts. The holder of a paycard will not have to deal with check cashing fees  In addition, because paycards include the selection of a PIN number, they are much more secure. If lost, it is unlikely that someone else could guess the PIN and use the card. For these reasons a paycard is valuable to employees as well as employers

While there has been concern expressed in the media about the security of paycards and the potential for hidden fees, paycards are subject to significant regulation. An informative explanation of how paycards are regulated can be found here. To summarize, many states have statutes that allow for employees to access their full wages, with no fee, at least once per month. Federal protections include Regulation E, which requires disclosure of fees associated with an employee’s use of the card. Fees may be incurred, particularly if the cardholder goes outside the free options to access his/her money, but these fees must be disclosed. Funds on paycards are insured by the FDIC, and branded paycards (Visa, MasterCard, etc) often enjoy a zero cardholder liability policy in case of a lost or stolen card or fraudulent behavior (by someone other than the cardholder).

At Pamiris, one of the advantages we offer with our service is our relationship with TFG Card Solutions, Inc., whose website can be accessed here. Employers simply have their employee fill out the TFG card form and the Pamiris direct deposit form and send both to Pamiris. We enter the information into our system and the card will be used for direct deposit on the very next payroll, in most cases. There are many options for card use, such as dividing one’s wages between the employee and a card held by his/her spouse, the ability to check balance online or over the phone, and many others. The TFG Frequently Asked Questions page can explain the many card characteristics.

Resources:
https://www.paperlesspay.org/
http://usa.visa.com/corporate/corporate_solutions/payment/payroll-faq.html
http://paycard.americanpayroll.org/compliance-overview
https://www.tfgcard.com/index.php/pages/employersfaq

*Source: Employee Benefit Research Institute and Mathew Greenwald & Assoc., Inc., Retirement Confidence Survey
**Source: TFG Card Solutions, Inc. promotional material

Bonus Question and Answer

The month of December often includes paying out year-end bonuses. In the Pamiris system, this can be accomplished when running a Regular Payroll, by processing checks in-house and running a Manual Payroll, or by requesting a Custom Payroll be built.

In order to avoid confusion when the time comes, here is an FAQ on entering bonuses using the Pamiris sytem.

Q: What is Grossed-up vs. Not Grossed-up?

A: A Grossed-up Bonus means that the employer will cover all the Federal taxes, state withholding is excluded. As an example, an employer intends to pay an employee a $100 bonus. The employer, having selected Gross-up pays the amount of the bonus, ($100) plus all associated taxes ($100/.6935 in 2012). As a result, the employee will actually receive a bonus amount of close to $144.20. Any other taxes (state unemployement, state income, etc.), are assessed as usual.


Grossing up bonuses can be very costly to the employer but you have to think of it not as a $100 bonus but as a $144.20 bonus if you want the employee to receive a full $100 net bonus.

For a Not Grossed-up bonus, the employer pays the gross amount of the bonus ($100), but after associated taxes are taken out ($100 * tax % from employee W-4) the employee receives a net bonus amount that will vary, depending on their tax rate.

Q: How does Pamiris calculate the Grossed-up amount on a bonus?

A: Gross = Net/1 – (FIT rate + SS rate + Eme Med rate)

Q: What is discretionary vs non-discretionary?

A: A discretionary bonus is one given at the sole discretion of the employer, it is not an amount that has been promised to the employees. A non-discretionary bonus is given after the employer determines what standards are required to receive a bonus and an employee expects to receive that bonus if they have met those standards.

Q: How do I enter a bonus in the Pamiris system?

A: Log into the Pamiris system

  1. Go to Payroll.
  2. Go to Bonuses/Commissions .
  3. Choose an employee from the drop-down menu.Year End Bonus-Commissions
  4. Click Add.
  5. Choose an Effective Date from the drop-down calendar at the top of the page. (Effective Date needs to fall within pay period that you want to pay out funds).
  6. Enter amount of Bonus.
  7. Enter Description.
  8. Select type of Bonus (one button in each column must be marked before you can proceed).
  9. Click Save.
  10. View page with complete list of bonuses for every employee.
  11. Bonuses are not viewable on Bonuses/Commissions page once they are run in a payroll. They are viewable on paystubs and payroll reports.Add Bonuses
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