If your paycheck bounces, first contact your supervisor or employer, depending on whom your point of contact is in your organization. It’s only fair that you give them the chance to sort out the problem causing the bounced payroll check on payday.
However, if the relevant parties aren’t interested in solving your problem, reach out to your bank and request documentation showing insufficient funds, and complain via your state's labor board. Alternatively, you could take legal action by hiring an attorney and filing a case at the small claims or superior court in your area.
Who Is Responsible?
According to Legal Aid at Work, current labor laws state that your employer should have enough money in the bank to cover your payroll check for 30 days after its issue date. And for every day you remain unpaid after your check bounces, your employer owes you an extra day of wages on top of the amount of the check.
A bounced payroll check implies that your employer’s bank account doesn’t have enough money to cover the amount of the check and its associated costs. So, if they cannot show that the bounced check is due to an honest mistake and pay what they owe you, they are guilty of misdemeanor, making them liable for criminal penalties.
However, whom you contact when the check bounces will depend on your organization’s policy. If you work for a small business, you could go straight to your employer. But in larger organizations, you should follow the chain of command. That means starting with your immediate supervisor or the human resources department.
Will You Get in Trouble?
Writing bad checks is criminal under federal and state laws. But when your employer’s paycheck bounces, you are not legally liable when a check you write bounces.
However, you could get into financial trouble if you fail to pay your bills on time, accumulating debt. Also, your bank could charge you extra fees (non-sufficient funds (NSF) fees) for depositing a bounced check.
In addition, if you handle the situation poorly when confronting your employer, and it turns out to be an honest mistake, you will make a poor impression on everyone. That may cost you in the future when promotions come up.
What Should You Do When Your Check Bounces?
It would be best to take certain steps when your payroll check bounces.
- Calmly talk to your employer. Explain the situation, and request a written confirmation for when you should expect a replacement check (which should cover the associated bounced check fees). You can do this directly or via the official point of contact, depending on company policy.
- Contact your bank via their customer service line. Explain your situation. According to the Consumer Financial Protection Bureau, financial institutions charge an average of $35 per transaction as NSF or overdraft fees, some of which you may be forced to pay. So you can also inquire whether your bank can offer a one-time waiver of any charges that you may have attracted. You should also request a copy of the returned check with an insufficient funds marker and a bank statement showing the transaction and overdraft charges.
- Create a paycheck folder. Keep records concerning the issue including any correspondence, bank statements, pay stubs and a copy of the bounced check.
- Ensure you have enough money to cover automatic payments, or transfer monies from other accounts to do so. Alternatively, you can cancel the automated payments to avoid overdraft charges from your savings or checking account via your bank portal, or by calling your creditors and explaining your situation, then asking for extra time.
- Use the U.S. Department of Labor tool to find its local offices if your employer doesn’t cooperate. Contact the relevant parties and file a complaint against your employer for issuing bad checks. Then follow their advice to move your case forward.
- Request for legal help from your local legal aid offices. Hire your own lawyer or represent yourself and file a Statement of Claim at small claims court. The maximum amount you can claim at small claims court varies by state. If what you are claiming exceeds the limit, you may need to file your case at the superior court.
Can You Collect Unemployment Benefits?
The Texas Workforce Commission explains that it's rare to get unemployment benefits for quitting your job. So, if you quit your work without good cause, you are unlikely to qualify for unemployment benefits.
However, you may qualify for these benefits if your employer continues to issue bad checks and you quit your job. Your actions may be considered as quitting for good cause.
How Does a Bounced Paycheck Affect Your Finances?
If your employer writes you a bad check, and your bank or credit union reverses the funds, you may be charged a fee. And if you get a second check and it’s still bad, you could attract another fee. Eventually, the charges will accumulate and leave you short of much-needed funds.
Also, if you don’t follow up with the matter when your check bounces, you won’t get paid your wages. Then your debts will accumulate and overwhelm you, and your creditors will come after you. So you may end up getting sued and losing some of your assets.
I hold a BS in Computer Science and have been a freelance writer since 2011. When I am not writing, I enjoy reading, watching cooking and lifestyle shows, and fantasizing about world travels.