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Business Owner Cashing Employee Checks
Answer by John Burnett, BOL Guru
Guru Bios

Question:  We have a business owner who is insisting on cashing employee checks. The checks are made payable to the employee, signed on the back by the employee and then endorsed by the business owner. This does not seem right since we have no real way of knowing if the employee really exists or if the employee is getting all the money from the cashed item.

Answer:  It is not your institution's responsibility to enforce the fair labor laws or to detect padded payrolls. In-house check cashing is often a way that employers can keep employees from taking work time to visit a bank or check cashing store. In most cases it is completely legitimate. There are a host of other reasons an employer might want to offer payroll check cashing as a service to its employees. Some of those reasons might involve illegal activity, a padded payroll, hiring of illegal workers, etc. The mere fact that the employer cashes employee paychecks is not, in my opinion, enough to warrant allegations of suspicious activity.

First published on BankersOnline.com 9/01/08







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