If cash flow is tight, making payroll can sometimes be a problem. For Washington employers finding themselves in that situation and considering various options, there is now even more incentive to make sure that employee payroll is fully funded.
Effective January 1, 2023, RCW 49.48 has been amended to address situations in which paychecks are returned due to insufficient funds. When that happens, if the employee presents the dishonored paycheck to the employer within 30 days, the employer is now obligated to reimburse the employee for any bank charge for the dishonored check. The only exception is if the employer’s financial institution confirms in writing that the instrument was returned due to an error by the financial institution.
These charges would be on top of any liability the employer might have for failing to pay employees their wages.
As an important reminder, pursuant to a separate statute (RCW 49.52) any officer, vice principal, or agent of an employer who knowingly deprives an employee of wages that are owed can be held personally liable for the employee’s wages, a second amount as penalty, interest at 12% and the employee’s attorney fees incurred in seeking relief. This provision would likely apply to a situation in which the officer, vice principal, or agent knew that the employer’s bank account did not have sufficient funds to meet payroll.
The legal issues impacting workplaces are ever changing (Employment Law in Motion!) and since publication, new or additional information not referenced in this blog post may be available.
This article is provided for informational purposes only—it does not constitute legal advice and does not create an attorney-client relationship between the firm and the reader. Readers should consult legal counsel before taking action relating to the subject matter of this article.