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Paychecks issued from out-of-state banks may trigger a labor-code violation

by on
in Small Business Tax Deduction Strategies

It’s a little-known detail within some state labor laws, but in California, for example, the issue could end up costing an employer big. In Fleming v. Dollar Tree Stores Inc., a federal district court in San Francisco is letting a proposed class action go forward that alleges Dollar Tree issued payroll with checks from an out-of-state bank with no California branches. That, the complainants contend, forced employees to incur check-cashing fees and extended waiting periods for their deposits.

To avoid the same fate, the court hinted that all employers can satisfy the mandates of stringent labor codes by doing one of these:

1. Offer to cash employees’ checks at one of its business locations.

2. Retain a check-cashing service.

3. Arrange for in-state banks to waive any check-cashing fees that employees otherwise would have to pay.

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