update from the reader whose paychecks were bouncing

Remember the reader whose paychecks were bouncing? Here’s her update:

The company I work at actually had me on assignment, while I was technically employed by the payrolling company who bounced the first two checks in October. This becomes important later.

My company told me they were paying the payrolling company. I know the people here well enough that I believed them. My company contact was able to help me connect with the vice president of the payrolling company. They confirmed my company was paying them and told me it was a technical error on their part because they had recently switched banks. The payrolling company reissued the checks, overnighting them, promising they would work this time. The checks bounced again. (I called the vice president of the payrolling company again, to let him know. He advised me to switch to direct deposit, because “checks are hard.” In retrospect, that probably should have been the moment I hied myself to the labor board). Then, the third check they issued for the month of October bounced as well. (And, of course, bank fees were added to all of this.) I was able to get my fourth check only because I had the presence of mind to go to the issuing bank and have it cashed. Then, my contract, which was originally up in October, was extended through the end of November.

The payrolling company decided they would directly wire the money for the checks and the fees into my account, eating the cost for it. (My bank charges for direct deposit, which is why I didn’t sign up for it in the first place.) They wired only the first two checks for October (instead of all three) and some of the bank fees (in the middle of November!). Then, their first check for November came and I went to the issuing bank to try and have it cashed. The issuing bank couldn’t cash it — there weren’t any funds in the account. That was the last straw. I made a trip to my state’s department of labor (since mine will only let you either mail documents in or submit them in person, I didn’t want to risk the documents getting lost in the mail). They said they would mail me a letter with a date for a conference . . . in six weeks. Which didn’t seem very helpful.

The company I’m on assignment with got fed up with the payrolling company’s lack of responsiveness and inability to pay me on time, and so they fired them. (I can’t find it in me to feel the least bit sorry about that). Since my contract is with the company I’m on assignment with, I got to stay until the end of November. They paid the checks I was owed, covered the bank fees I’m owed and a bit more, and give me a slight raise (though I’m now responsible for my own withholding). To no one’s surprise, the check of the company I’m on assignment with went through, no problem. [I told a friend about all of this — she said I have to be the only temporary, part-time employee she’s ever heard of getting a raise — of course, I was also the first person she’d ever heard of to have their work check bounce (though, since all this has happened, not the last!)]

I’m not entirely sure what this means for my department of labor case. If I wanted to, I could probably still go after the payrolling company for fines for keeping my checks from me so long. Whether or not I’ll want to do that in a few weeks, I don’t know. It will probably largely depend on my job situation. (If I’m working full time, I’ll want to put my energy into my job, not into taking time off to quibble over fines I may or may not be owed. If I’m only working part-time or if I’m unemployed, then I’ll have some free time on my hands and the fines they would owe me in my very pro-worker state could be useful to me.) But that is a decision I can put off until I get the letter with the date of the conference.

The company I’m on assignment with completely won my loyalty and I’d happily work for them any time. I learned that sometimes, companies are capable of expending more energy than you would think they were capable of to do the right thing. And I learned that if anything is even marginally fishy about your workplace, you should absolutely not procrastinate on getting into your local labor office. Oh, and I should find a bank that doesn’t charge for direct deposit.

{ 46 comments… read them below }

  1. Eric*

    Does the DOL complaint name the employer or payroll company?

    This could be completely wrong so feel free to correct me but I would imagine it’s the employer who is on the hook for getting you paid, not the payroll company (though they are certainly to blame for the mistakes).

    1. Kimberlee, Esq.*

      It depends on whether the writer was formally employed by the payroll company or by the employer. There are companies who lease employees to other companies, rather than simply running a payroll service for employers. Whether or not the OP has a wage complaint also probably depends on whether they are employee or contractor; it sounds like they might be a contractor.

  2. Not So NewReader*

    I am wondering if there is a criminal case here. Clearly, the payroll company has fiduciary responsibilities that it totally FAILED at. The payroll company diverted funds- made the funds inaccessible to the intended recipient. (Whether it was intentional or not remains to be seen. This could be extreme carelessness. Why do I doubt that, though?)
    Looks like breach of contract to me- barest minimum.
    Personally, I think that both you and the employer should contact the Attorney General’s office and ask for an investigation of the payroll company.

    I wonder what the payroll company was doing with all that cash…. hmmmm.

    On the plus side- It was a very difficult situation, congratulations for getting through it. I enjoyed reading your summary paragraph about what you learned. I am sure that the employer learned something about the quality person you are, too.

    1. fposte*

      I think the breaches you’re talking about are civil and not criminal. However, I know my state’s AG gets involved in some civil stuff, so it sure wouldn’t hurt to alert them.

      1. Not So NewReader*

        Right. I was typing too slow and thinking too fast.
        My thought is figuring out where that money went, that could bring about criminal charges. That would be down the road a ways, if at all. (That money went somewhere. Where did it go?)
        The AG office for my state is a strong and effective advocate (just my opinion, though). OP mentioned having the energy to keep following this up. (Yeah. So true.) If the AGs office agrees to look into it- then the OP can just settle back and take care of his/her personal matters.

        However, sometimes the mere mention of the AG’s office causes all kinds of things to suddenly straighten up.

      2. anon-2*

        In some states (like mine) non-payment of wages can become a criminal matter.

        Companies generally make sure they don’t have payrolls bouncing due to a “technical error” or “switching banks”. If they assigned the task (and money) to someone else, and that “someone else” (payrolling company) didn’t pay you – the employer is ultimately responsible.

        Sounds like your employer is on the ball. But you had to light some fires, and you shouldn’t have had to.

  3. V*

    OMG! The new graphic at the top of the home page is so adorable. How long has that been there?!

    (off topic, sorry.)

  4. LL*

    “They paid the checks I was owed, covered the bank fees I’m owed and a bit more, and give me a slight raise (though I’m now responsible for my own withholding).”

    I’m not sure if I understand this correctly. Did they retroactively change you from an employee to a contractor? If so, I hope that raise was substantial.

    1. ARM2008*

      This does sound complex. Is OP going to end up getting a 1099 from the client company and a W2 from the payroll company for the same income? Becoming responsible for one’s own withholding can be quite cumbersome for someone who hasn’t done it before, and may involve hiring someone to deal with the paperwork and such. I’m afraid the frustrations probably aren’t over yet for OP.

      1. Anonymous*

        I’m confused by the use of ‘payroll company’ in the OP. On one hand, it sounds like a temp agency of sorts that directly employed OP to go work for the client, but then other parts of the message makes it sound like a literal payroll processing company, and that OP worked for the ‘client’ directly all along.

        1. KayDay*

          That’s what I was wondering. If the OP was actually an employee of the payroll company, that sounds like a temp agency (or something similar), in which case the OP’s case should be against them. However, if it’s a payroll processing company, the ultimate responsibility is usually with the real employer.

          I think it sounds like the paying company is a temp agency of sorts. I’ve heard of people being loaned to other agencies in government (aka “on detail”), but not in the private sector (but that could just be my experience).

        2. Zee*

          I understood it that the OP was temporarily hired by Company A, and they used Payroll Company 1 to issue the paychecks. Company A kept paying Payroll Company 1, but its checks to the OP kept bouncing.

    2. Kimberlee, Esq.*

      My guess is that the OP was a leased employee, paid by the payroll company directly. I’m also guessing she’s been a contractor the whole time; employers are allowed to handle withholding and other taxes for contractors, and in some cases are actually required to take withholding from their contract payments and remit it on their behalf. If it’s a leasing company, it wouldn’t surprise me at all if they always did the withholding for contract employees so they don’t have to worry about which ones they’re required to do so with, and which ones they’re not.

      I also suspect all this, because I think that if it were a general employer/payroll company relationship, the employer would be a *lot* more pissed about it, and that probably would have been cleared up in a couple days. But if the employer has no legal requirement to pay the employee, and have already remitted their contractually required payment to the payroll/employee leasing company, its something they would probably care about less. Until it became ridiculous and they fired the leasing company. Which it appears they did.

      1. Laura L*

        I would think the company would be mad that the money they paid the payroll company isn’t going where it’s supposed to go!

      2. Ornery PR*

        I think this sounds mostly correct. I work for a PEO (Professional Employer Organization) and in that situation, we co-employ our clients’ employees. Sometimes this is referred as employee leasing, but I think that term gets confusing. We do their payroll, as well as administer benefits and other HR services (including hiring/firing in some cases). Most of our “employees” (our clients’ ee’s) were hired directly by the client (referred to as “worksite employers”) and they don’t know exactly how we fit into the situation. Usually they only know that our name is on thier checks, so they think we’re just a payroll company, when in fact that’s not the whole scope of what we do and what the technicalities are. I’m willing to bet the OP’s “payroll” company is a PEO, which would make both companies her employer. It would also make the PEO liable for any payroll error or bounced checks (unless her worksite employer didn’t pay, which is not the case here). Sometimes PEOs have a temporary staffing division, but not most.

        Sounds like the OP was able to find the source of the problem (the PEO), address the issue directly, protect her worksite employer from a neglegent company, and get her problem resolved. Good work OP! It looks like you navigated a tough situation; you definitely deserve that raise!

      3. anon-2*

        Or until the contracted employee stops showing up for work when her paychecks bounce.

        Or, until the contracted employee goes to her local attorney general’s office and starts naming names.

  5. The Other Dawn*

    I’m so glad this worked out for you!!

    Just gotta say: in this day and age there’s a bank that charges for direct deposit? Seriously?? I work at a bank and have never heard of that.

    1. Andrea*

      Yeah, that jumped out at me, too. I’ve never heard of such a thing. And I’ve been banking at a smaller regional bank (locations in 5 states) for 12 years. (People often assume that smaller banks will have more fees, but that hasn’t been my experience.).

    2. Esra*

      Totally crazy. My bank gives me bonus rewards for getting things direct deposited/debited. Surely direct deposit is cheaper for them than processing a cheque.

    3. Natalie*

      My experience has been the exact opposite, in fact – I get fees waived because I have direct deposit.

      1. The Other Dawn*

        Yes, my bank waives fees if a customer gets direct deposit. And, yes, it’s cheaper to process incoming direct deposits than to handle checks.

  6. Ryan*

    Banks shouldn’t charge for direct deposit…that wouldn’t be a bank in a large metro area would it? They love to charge for EVERYTHING. Find a better bank. Community banks are usually less fee-happy (though make sure it’s an actual community bank and not just one of a hundred under the umbrella of some large holding company that specializes in “community” banks)

    1. K.*

      My big metro bank doesn’t charge for direct deposit. That jumped out at me too – I switched banks (from one big metro to another) to avoid minimum balance fees; I was a contractor at the time so things could get lean between jobs. But I’ve never heard of a bank that charges for direct deposit and if I came across one, I wouldn’t do business with them.

      1. Anonymous*

        I’m sure you’ve had great experiences with your credit union, but like banks, not all credit unions are created equal. None of the credit unions around me can surpass the level and cost of service I get from my Big Bank.

    2. Another Emily*

      I agree it’s weird for a bank to charge for a simple service like direct deposit but that’s kind of a red herring… a payroll company should be capable of making out a (good) cheque to someone. I don’t think you’re implying this, but it’s worth saying that the OP didn’t do anything to create this situation. And the OP did say she’s going to look in to a bank that doesn’t charge for direct deposit.

      1. Ryan*

        Yes, it’s just a side matter…I was just speaking to the part of the topic I have the most experience with. I was absolutely not suggesting it was the OP’s choice of bank that was the cause of the problem. It was more of a, “Yeah…and that doesn’t sound right either.” comment.

  7. Pragmatist*

    The Other Dawn – there are banks that charge for the craziest things. My mother is in the process of switching her bank. One of the reasons is that they charge some ridiculous PER CHECK fee for using their on line system to make payments. In this day and age? Really? Her new bank doesn’t do that…

    To the OP, yes definitely get yourself to a bank that doesn’t charge for direct deposit. The payrolling company was totally at fault, but still, you are better off with direct deposit – and it’s much harder to bounce one of those things.

  8. perrik*

    Very odd – a lot of banks that have a monthly service charge waive it if you *do* use direct deposit. It’s cheaper for them to process an electronic direct deposit than a paper check. OP, find a better bank!

    So glad that your contracting agency has the integrity to do the right thing for you. If you (and the state Department of Labor) ever find out what was going on with the payroll company, please give us another update. Extreme incompetence or outright fraud, place your bets everyone…

    1. Another Emily*

      I vote extreme incompetence. “Never attribute to malice that which is adequately explained by stupidity.”

  9. KayDay*

    I also second all the people who said find a better bank. If there is some reason you want to keep a relationship with your current bank, at least open another checking account to receive your pay. While you’re obviously entitled to your pay on time no matter the form, direct deposit usually is easier for all parties involved.

  10. ChristineH*

    Glad to see this all worked out, although I was wondering the same thing Eric posed above….doesn’t payroll come out of an employer’s funds?

    OT: Happy to see the winterized Alison back in action!

      1. Zee*

        *Her :-)

        As per the OP’s write-in, the company was paying the payroll company. So the payroll had the funds. What it was doing with the funds after that is unknown.

  11. EAST*

    Suggestion for a bank- USAA. You don’t have to be military for banking, just insurance. They are the only bank I’ve ever worked with that is there for you, or that I would recommend.

    My brother was overseas and someone cleaned out his account. USAA placed the funds back in his account pending the investigation, instead of investigation & then give you your money back. Their response was ‘It happens, especially in SE Asia.”

    It’s really easy to access your account online, local atm’s, and you can make deposits online, mail or UPS stores…

    1. Josh S*

      Plus, if you withdraw money from non-USAA ATMs that charge a fee, USAA will refund those fees to your account at the end of the month, up to $15-20. So if you get some cash from, say, a Chase ATM and they charge you $3, USAA pays you that $3 back.

      They’re a GREAT credit union.

      1. Laura L*

        Yes! This is a great perk. The only other bank I know of that does this is my local community bank from back home.

        I also didn’t realize that you can bank with USAA even if you aren’t a military member. That’s awesome!

        1. Natalie*

          You can also use their insurance products if you are the child or spouse of a former member. In my family, that means we’re “passing down” USAA membership from my grandfather.

  12. Frank*

    I have been having the same problem, checks bouncing multiple times, replacement checks sent overnight, replacement checks sent through the mail and bouncing again, offers to direct deposit
    (as if you would ever trust them with your bank information). My latest replacement checks were returned by my bank today.

    I am not shy, I will specifically name the company.

    It is Payrolling.com. They are headquarted in San Diego

Comments are closed.