Did you know that if an employee does not cash a paycheck that you can’t just void it in your system once it has become stale dated? If you notice there are un-cashed checks in your accounting file after a reasonable period of time for them to have been deposited, it is your responsibility to make sure the employees receive those funds. This is not hard to do if the employee still works for you. All you have to do is reverse the original check and write a new one (don’t void the first check as it is most likely from a prior accounting period which is another topic altogether).
But what do you do if the employee no longer works for you? The first thing to do is to send a certified letter to the last known address for the employee letting them know your records show that there are funds due to them because of an un-cashed check (or checks). If they are still at that address, they will be able to contact you and you will be able to issue a new check. However, if they are no longer at that address, the letter will be returned to you as undeliverable. You will then have proof that you have done your due diligence to contact the former employee.
Once you have determined that you are unable to find the former employee, it is your responsibility to turn those funds over to your state. It then becomes their responsibility to locate the person and issue the funds to them. Each state has its own set of regulations. To find out what rules apply to you, search the state agency websites for information regarding escheat rules.
Failure to follow the rules of your state regarding un-cashed payroll checks can cause your business to be assessed a fine. Make sure you follow all state guidelines in regard to money due your employees.