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HR LibraryPay & SchedulingWage and Hour Enforcement and Penalties

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Insufficient Paycheck Funds

If a paycheck is refused payment because you have no account with the bank or have insufficient funds, you are liable for one day’s wages for each day until the amount is paid or until the employee files an action to recover the wages, up to a maximum of 30 days’ wages. The employee must have attempted to cash or deposit the paycheck within 30 days of receiving it.1

The penalty does not apply if you can establish, to the satisfaction of the Labor Commissioner or court, that the violation was unintentional. The penalty also does not apply if the employee has recovered the returned check service charge under California’s Civil Code.

1. Lab. Code sec. 203.1