What can be done if a business pays its employees with bad checks and it knows it is doing so?

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What can be done if a business pays its employees with bad checks and it knows it is doing so?

This happens almost every week so it overdrafts my account on a weekly basis, leaving me without money for days. They act like its not a big deal and think its ok to live off of the banks money. How illegal is it? By the way, I work for law firm.

Asked on June 25, 2015 under Employment Labor Law, Arizona

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

It's not legal, and a law firm should know better. First, even if it happens on a few, isolated occasions due to accident (someone not balancing the books right; an unexpected delay in receiving payments from clients), they would be liable for any costs that bounced checks cost their employees: e.g. overdraft charges. If you incur any costs and they don't pay them, you could sue for the money.

But if it happens regularly, they may be intentionally failing to pay employees, which would be a violation of the Fair Labor Standards Act and could also, depending on the circumstances, constitute fraud and/or even, in some cases, a crime, and they could face additional liability.

You could contact the state labor department about this and file a complaint: they may be able to help you. The problem for you is, if they cannot or won't, you don't have any other good legal options: while you can sue, you can only sue for the actual monetary damages you suffer--e.g. those overdraft fees. But if they do ultimately pay, even if late, while they are violating the law, in the laws eyes the "damages" are small, since you receive the money (albeit late) and the amount you could sue for would be limited.

On a practical basis, you need to fear that if they do this, it's because they are in financial distress and so at some point may default entirely (not pay you); or because someone (maybe a partner) is playing "hanky panky" with the finances and taking more out of the company than he can or should. You should probably try to find a different job: there is nothing good about the situation.


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