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Aug16

Name on Paycheck

An employee stated his wallet was stolen so he cannot cash his check. He asked me to cash it but we do not have cash on hand. Then, he asked me to make a replacement check in his fiancé’s name. Is this legal?

Paying an employee cash is legal; however, it does come with quite a few tax implications. So, if you decide to do this in the future make sure you check with an accountant first.

By writing a paycheck out to another individual, you’re paying that person for work performed by someone else. Essentially, the employee is not getting paid and proper taxes will not be withheld. This violates federal (and most state) employment and tax laws.

Inform the employee that you are not permitted to write his paycheck out to anyone else but him. Let him know that he can consult with his bank about endorsing the check to another party. Though banking institution protocols vary, it’s usually as simple as writing “Pay to the order of…” on the back of the check. This is a problem the employee has to manage not the employer.

This entry was posted on Tuesday, August 16th, 2016 at 8:52 pm and is filed under
Compensation.
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