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Abandoned wages, abandoned property, escheat…the process may have many names but only one real requirement. All “holders” (aka employers) must report all unclaimed wages to the proper state, at the proper time, in the proper manner using the proper method. No, if's, and's, or but's. The trouble is many employers are simply not aware of these requirements. The issue of non-compliance is just a matter of the company not being aware of its reporting responsibilities. But unfortunately, not being aware of the requirement doesn’t stop the huge fines and penalties that befall the company for failing to report unclaimed wages.
Failure to comply with state regulations could now result in audit assessments, significant interest accumulations, and criminal penalties. The ramifications may not even be limited to one state. For instance, organizations with corporate headquarters in one state and employees in other states could be liable for penalties in all states that they have employees. It all depends on which employee did not claim which paycheck. And given the current economic environment, many states have moved towards unclaimed wages as a source of revenue that can be easily tapped with existing laws and a crackdown on enforcement.
The only way to avoid these huge penalties, fines, and interest is for the payroll department to correctly identify all unclaimed wages, and report and remit them each year to the proper authorities.
It is every employer’s responsibility to identify which paychecks have remained unclaimed by employees and to turn over these “unclaimed wages” to the appropriate state annually. But most employers are unaware of this requirement and are equally unaware of the penalties, fines, and especially interest that can be levied against such employers by the state.
Join this webinar to know when wages are considered abandoned, how to track and submit these checks to the appropriate state, and how to perform the required due diligence.
