What to do about bounced payroll checks?

I have a family member that is working for a buisness that has been bouncing the payroll checks for the last 2 months or longer. The owner is taking cash out of the till to go buy hooker and drugs. He does this regularly. In fact he has taken $1500 cash from a customer for work that was done on their car and pocketed it. I am at a loss. He did make good with the past checks but one of the employees has tried to cash his check at the bank it was from. He tried and the account as empty.

Asked on July 4, 2012 under Employment Labor Law, Utah


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

If a payroll check bounces, the employee could sue the employer for the money he/she is owed plus any charges, fees, or costs he/she incurred due to the bounced check--e.g. a dishonored check fee, an overdraft protection fee, etc. However, if the check is later made good, the employee cannot sue for the value of the check--only for the additional costs, since U.S. courts generally only provide compensation for actual losses or damage.

Based on what you write, your family member should look for different employment--situations like these tend to escalate, until the owner is arrested, the company shuts down, the owner disappears with the money, etc.--and if he or she is ever behind by more than one dishonored check, should probably consider suing (including possibly in small claims court, acting as his/her own attorney). In these situations, you want to take action sooner rather than later, since the money tends to disappear and be unavailable to recover over time.

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