Colleen Regan Published in the Daily Journal
"For Employers, Payback's a Cinch"

Colleen Regan’s article, "For Employers, Payback's a Cinch," was published in the October 24, 2008 issue of the Daily Journal. In her article, Colleen discusses the escheat law, otherwise known as the law of unclaimed property. The article focuses on an employer's duty regarding unpaid funds and benefits after an employee quits. According to Colleen, "when compensation or benefits remain unclaimed by former employees, the employer ultimately must pay them over to the California State Controller's Office, which is charged with administration of the escheat laws."

In order to comply with the law, Colleen recommends that California employers follow a series of steps, including: "Check on an annual basis with its payroll, accounting and benefits departments to determine whether there are any wages, commissions, reimbursements or bonuses that have not been claimed for at least one year, or matured but unclaimed IRA, Keogh or other benefit funds unclaimed for at least three years; once unclaimed property has been identified, the employer must send due diligence notices (for all unclaimed amounts of $50 or more) to the former employees/owners, warning that the unclaimed amounts are about to escheat; next, the employer must prepare and file a Holder Notice Report (USF-1) with the controller's office; then, the controller's office (within 165 days) sends notices to everyone listed on the Holder Notice Report with property valued at $50 or more." 

Colleen concludes that "If these steps are properly followed, the employer is relieved of responsibility for maintenance, custody and accounting for the property. If they are not followed, the employer may be subject to a compliance action by the controller's office, potentially onerous fines (up to $50,000), and interest on amounts not properly paid or delivered."