Legal Question in Business Law in California

we are holding our 2 paychecks for the last 4 weeks. Will the check be valid if

the company goes out of business?

I don't have money to pay for this answer

Asked on 11/13/12, 1:36 pm

3 Answers from Attorneys

Edward Hoffman Law Offices of Edward A. Hoffman

If you are worried that the company is about to fail, you should deposit the checks right away. The checks won't necessarily bounce if the company goes out of business, but you haven't offered any reason why you should take that risk.

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Answered on 11/13/12, 3:23 pm

Bryan Whipple Bryan R. R. Whipple, Attorney at Law

The "validity" of a check may mean either of two things: (1) that the check will be paid when it is presented to the issuer's bank for payment; or (2) that the check represents the maker's intent that the payee shall receive the funds. Obviously, #1 is the more doubtful. If the bank dishonors the check, it may still represent a valid and perhaps collectible claim against the maker/employer.

I'm not sure why you are holding off on depositing the checks. Did the employer tell you there were insufficient funds at the bank? Giving an employee a paycheck drawn against insufficient funds is illegal (a misdemeanor) in California. Labor Code sections 212(a)(1) and 215. Your local Labor Commissioner's office can give you more information and advice.

It's very hard to tell when an employer really needs "just a little more time" to cover the paychecks, or when the company is about to go down the drain. Often, the employer may not even know, or may be in denial (I know; I've been there).

Another possibility is that you could go to the employer's bank every day, and ask if the check is cashable ('good') at that moment. When it is good, cash it immediately.

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Answered on 11/13/12, 6:06 pm
Anthony Roach Law Office of Anthony A. Roach

Why are you holding the checks? It is illegal for an employer to do so, or to fail to pay you on time.

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Answered on 11/14/12, 9:21 am

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