what to do when your paycheck bounces

A reader writes:

I work for a small office part of a larger company. They use a second company to pay me. I checked my bank account this morning and the checks they’ve given me this month bounced. Other than informing my boss and e-mailing the company which I’ve done, is there anything else I should do? I didn’t sign up for direct deposit (and thankful for that!), but I’m wondering if I can request they pay me via cashiers check or something else? My bank incurs a charge for bounced checks (which I’m requesting the company that pays me to refund, but I worry that this makes me look like a bad customer to the bank).

You should find out if this was a clerical error or something more — i.e., is the company having trouble meeting payroll? If so, that’s something you want to know, because it means you should be looking for another job in case this is going to continue. It’s completely reasonable to say something like, “I’m of course a bit unnerved to have paychecks bouncing — what caused it?”

You’re correct to ask the company cover the bounced check fee, which they should do. I wouldn’t worry about it making you look bad to your bank; you weren’t the one writing bad checks.

If it caused any overdrafts, it’s reasonable to ask your employer to pay any overdraft fees as well.

You can also ask that the replacement checks be done via wire transfer directly to your bank account.

If the money isn’t reissued quickly, you can contact your state labor agency, since employers are required to pay you within a specific period of time, and until those checks clear, you haven’t been paid.

You probably can’t ask that future paychecks be cashier’s checks; that’s asking them to start using a whole different system for payroll, which most employers aren’t going to do. Plus, if you’re at the point where you really don’t trust your employer to pay you with valid checks, there’s a bigger issue to address anyway.

You can read an update to this post here.

{ 48 comments… read them below }

  1. Brett

    Direct deposits can’t bounce…I don’t see the downside here?

    Who else is paid by this same third party? If OP knows anyone, he/she can probably figure out if direct depositors got paid, if other checks cleared, or if everyone was stiffed.

    1. Jamie

      Direct Deposit can bounce if there is an approval error in the transfer.

      It’s not really bouncing as much as getting pulled back. Short version is payroll is transferred to 3rd party payroll company and distributed > issue with either transferring bank or payroll company causes payroll to be “pulled back” > over draft fees out of everyone’s accounts who had automatic with drawal or hit the ATM that morning without enough to cover it pre-check.

      It’s rare – and heads roll – but it does happen. Not nearly as often as a bounced payroll check though.

      1. Anonymous

        That said, at least with direct deposits, you aren’t worrying about the company’s dwindling bank balance between the time the check was issued and when you go cash it.

        1. M-C

          Agree. I worked at a company where only about 3/4 of the checks could be covered, so we all opened accounts next door at the same branch at the company, so we could personally rush over and get in line for cash as soon as we got ours. Paydays, whenever they occurred, were not a good day to be sick or traveling :-).
          That said, it was my first job, I wouldn’t put up with that any longer.

      2. Chinook

        Or they may do something at the payroll end and just not notify you. It happened once with DH’s military pay – they zeroed it (due to the French clerk not understanding the difference between 2nd and 2) and didn’t bother to notify us (paystubs were emailed and he didn’t have access to his government email). We found out by accident the day before, explained the language issue to his supervisor and were immediately cut a cheque.

        Needless to say, both DH and I ALWAYS check our paystubs now.

  2. some1

    When you get future paychecks, go to the issuing bank ASAP and cash them, then deposit the cash in your account at your bank.

    Also wondering about the direct deposit thing…

    1. AG

      My fiance had to do this when he worked for a shady construction company (prior to finding a new job!).

    2. Kate

      This is what my boyfriend did when he worked for a company that wasn’t doing so well. It was kind of a pain, but you know right away whether it goes through or not.

      I had a paycheck from a shady lifeguarding company bounce, and it was like pulling teeth to get them to pay the fee. It was such a pain!

    3. Parfait

      +1. I used to have to do this, yonks ago, when I worked for a place that was having financial hardships. The whole crew would race over to the issuing bank and get in line on payday Fridays. Nobody wanted to be last in line in case the rest of us got all the money!

      1. Jamie

        This is horrible – it’s like that episode of MASH when the goat ate most of the payroll and Col. Potter ordered to, “pay enlisted first until the money runs out.”

        I will put up with a lot from an employer – but not this. Hope everyone is out of that situation.

    4. Anonymous

      This is exactly what I started doing as soon as the first check at one of my jobs bounced. You only get to do that to ME once!

  3. Not So NewReader

    There was a situation with my former employer regarding direct deposits.

    We had direct deposit in place for years- things went along smoothly. For some odd reason, one week the deposits were not made. Since most of us had been use to the direct deposits being on time- we assumed the money was in place in our accounts. It was a Friday- everyone did their shopping before going home. A bunch of employees wrote bad checks that Friday and others found their debit card was not working. It was a mess.

    I have forgotten why the slip up happened. It could have been because of a holiday during the week. I am not sure.

    OP- yes, get cash at the bank the check was drawn on. That will be a major help for you- and yeah, a pain in the butt, too.

    1. Omne

      I had that happen when I was in the military. Ever since I never spend the money until I log on and actually see the cash in my account. The problem was that the computer tape ( yeah it was a while back… ) that went to the bank was bad.

    1. A Bug!

      Uh, writing a check to someone knowing it’ll bounce is fraud. If that guy’s got something that can show that the boss did it intentionally, that employer could be in for a whole world of hurt.

      (I’m sure that’s addressed in detail in the thread, but Reddit isn’t loading for me.)

      1. Laura L

        He does. According to his original post, his boss sent him an email saying that he purposely wrote a check that would bounce because the guy said something to him that made him angry. So, yeah. The boss sounds like a GREAT guy.

    2. anon-2

      Massachusetts. My home state.

      Very labor-friendly. Very nasty to bosses that don’t play fair.

      Non-payment of wages or deliberately bouncing a payroll check is a FELONY. Jail time. Handcuffs. “Yes, your honor.” “I want to talk to my lawyer.”

      1. anon-2

        OH, I forgot to add.

        Not only does a manager risk spending a night in jail, but we have a concept in Massachusetts called “treble damages”.

        What this means is that if a company or manager horses around with the payroll, and payment drags on beyond 30 days (this is to be contrasted against legitimate delays, clerical errors, and so forth) …. the boss / employer owes 3 x what would have been due.

        I don’t know about other states, but if you’re a boss in Massachusetts – this isn’t an area you want to get into.

  4. The Editor

    This reminds me of a college-era job I had. The manager pulled us all into a room, passed out our checks (hand-written by him), and then announced that there was only enough money in the bank to cover about 70% of the checks. He ended the meeting by saying, “I suggest cashing as fast as you can.” He shrugged his shoulders and walked out.

    Needless to say, we all ran to our cars and sprinted to the bank as fast as we could. I was one of the fortunate ones in that I cashed the check AND got a new job a few days later.

      1. Cube Ninja

        Probably not. Insert I-am-not-an-interwebz-lawyer disclaimer here, but the fact that the checks were written with the knowledge that some of them would be bad would make it check fraud.

  5. c

    How long does an employer have to wait before paying you?

    My boss accidentally put in 64 hours of PTO instead of 32 hours for my check dated 9/21. On 9/24, the company took our the entire amount and I still haven’t been paid for the 32 hours of PTO I should have had that period.

    My boss (the HR Manager) and the Controller are aware of the issue, but they said it’s something Corporate has to fix and they’re known for taking weeks to fix this kind of issue.

    I’m not sure how big of an issue to make of it, but it’s frustrating that it’s been over a month and I haven’t gotten paid.

      1. c

        Tennessee.

        I tried to look it up, but I wasn’t sure of the terminology. I know there’s a low that says employees have to be paid bi-weekly. I’m on a weekly pay schedule, so technically I did receive bi-weekly paychecks in September.

  6. Ursula

    My husband worked in the office of a roofing company that was badly run. They were behind in their payroll taxes and bills, so he went straight to the bank every payday and cashed his check. It’s very stressful working for a company in those straits, so I hope the OP is able to either find out what is wrong or gets a new job with a solid employer soon.

  7. Vicki

    While, admittedly, things can occasionally go wrong with direct deposit, I also wonder why the OP is “thankful” not to have it. I’ve been using DD for 15 years with no problems. There are no checks to worry about. Why would anyone _not_ take DD if offered? (AT my most recent job, we had no choice. That was how we were paid.)

  8. Chocolate Teapot

    There was one ocasion when my company was a bit late paying salaries one month. (Here, it’s quite normal for a third party service company to handle payroll) As soon as the company was aware, we were informed to let them know about bounced debits as a result. It turned out to be a computer glitch.

  9. M-C

    AAM’s advice is totally right. And unless you have a really compelling reason to work there, I’d definitely be hitting the want ads immediately. Most likely it wasn’t “a computer glitch”, because you’d have been informed by HR already. The second company deal seems really shady to me on the face of it. No matter what, don’t allow more than one pay period to pass without having all the cash in your account, because throwing good time after bad isn’t helpful.

  10. Kinrowan

    What my company has done for mistakes in paychecks (one person for example had been listed as not working there anymore so they had been paid for 4 days only instead of the whole pay period) is to issue what we call “advance checks” even though they are to make up their own mistake. The caveat is they only estimate the tax etc so the next regular paycheck usually has an adjustment to make up for that. But it does help tie people over.

  11. Joey

    Back when my wife worked for a very well known non profit her checks would bounce all of the time. It sucks because you know if you complain too much or elevate it to a state agency they’ll find a way to get rid of you. So she ended up leaving as soon as she found another job. Sad thing is the org used their status as a non profit for the excuses- we’re waiting for some donations/checks to clear. Of course no one said anything in part because the org made it seem like you’re not really behind the cause when you make a big deal out of it. I know this happens at all kinds of orgs, but I think non profits that do this are especially sleazy when they question your commitment to a noble cause.

  12. Pat

    If your employer has held a payroll check for 3 years, what kind of penalties would they have to pay on $500? Also can you be fired when you are on medical leave due to workman compensation for a work caused accident?

  13. Pat

    I live in Tennessee at the same address when employed. I do not know why they held it. Their policy states that a check will be mailed if not picked up at work within 24 hours. They had mailed many checks to the same address. I have been absent from work for 3 years due to a workman’s compensation claim. I assume the check was the last paycheck for time worked or benefits owed. They notified me by mail that they had the check this week.

    1. Ask a Manager Post author

      In Tennessee, you must be paid at least “semi-monthly.” After your last day, you must receive your final paycheck within 21 days.

      You should contact the Tennessee Division of Labor Standards at toll-free at 1-866-588-6814 for help.

  14. Tiff

    I had a job like that once – my very first paycheck bounced. I was working for a single doctor practice, and his wife was our office manager. Fortunately he’s very nice, even if he’s horrible with money. They made sure we got our pay and he also picked up the tab for the bank fees. I knew that job wouldn’t be my “last stop” career wise, and I moved on within the year.

  15. Curmudgeon

    Wow, I didn’t know this kind of thing happened that much.

    I work for a state government, and we are required to submit our time sheets during pay weeks (biweekly). Once, I did not submit until three days after (there is some leeway, but not that much), and I asked our HR person if I would get paid. She said that they legally had to pay me regardless of whether I submitted a time sheet or not; her demeanor was basically “not paying you is not an option, not matter what else happens.” I appreciate that, but I’m sorry to see that others haven’t been treated in the same way.

    1. LA

      This actually happens at my company all the time. All of our interns are hourly employees and if one isn’t in on the day that the time sheets are due they won’t be paid for that pay period. The company says they aren’t required to because they have no record of that person actually having worked during that pay period because they never received the time sheet.

  16. danr

    My paycheck bounced twice at my old firm (along with a bunch of others). The problem both times was a bank error. The payroll deposit was entered as a debit. The bank issued a new check the first time and a cashiers check the second. We also got letters from the company and the bank explaining the problem and asking that any bounced check charges be reversed. At that time things were not as automated as they are now, and the banks and local businesses held up reprocessing the checks until the funds were in the account. I brought the letters to my bank and to the business that would have been affected. All were very appreciative, and the bank officer had a good chuckle when he saw which bank (a big one) made the mistake.

  17. Jean

    We live in Vancouver B.C my husband quit his truck driving job and the owner is refusing to give him his final pay.They also bounced a cheque 1week ago and have not made good on that money either.The cheque that bounced was written with the wife saying to me I’ll have to transfer money into this account but that’s o.k cause it’ll take 3days before it comes back to our bank for processing.Here it’s very frustrating because we have to get a old of labour relations and it takes 2-4weeks for somebody to get a old of you,then it can take up to 6weeks before the next person calls,then they set a court date which can take 6-12weeks then you don’t always get what owed to you cause they claim hardship cause their not Canadian citizens yet.It’s just so freaking hard.

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