Escheatment (unclaimed wages)
Escheatment is the transfer of wages an employee never claims, such as an uncashed paycheck, to the state as unclaimed property after a dormancy period.
- LAW
- Each state’s unclaimed property law
- LIMIT
- Washington: presumed abandoned one year after payable
- DEADLINE
- Washington: October 31, insurers April 30, unless extended
- WATCH FOR
- Voiding stale paychecks instead of reporting them
State unclaimed property law sets the dormancy period, any notice you owe the employee, and the reporting deadline, and states can differ. In California, wages unclaimed for more than one year after they become payable escheat to the state. Washington presumes them abandoned one year after they become payable. Voiding an uncashed paycheck does not end what you owe: Washington makes the wages reportable even if the employee never asks for them or presents the check.
When do unclaimed wages become reportable?
The dormancy period generally starts when the wages become payable, and each state sets its length and its reporting date. In Washington, a later indication of interest from the employee, such as a written message to you about the wages, moves the start of the period. The state that takes custody depends on your records: Washington takes unclaimed wages when the employee’s last known address in your records is in Washington.
| STATE | WAGES BECOME REPORTABLE | REPORT DUE |
|---|---|---|
| California | More than one year after they become payable, if unclaimed | Before November 1, as of June 30 or the fiscal year end before it (life insurers: before May 1) |
| Washington | One year after they become payable | Filed and paid by October 31, unless extended, covering the 12 months before July 1 (insurers: by April 30) |
| Other states | Set by the state’s unclaimed property law | Set by the state |
What must you do before reporting unclaimed wages?
Unclaimed wages stay owed to the employee until the employee claims them or you report and remit them to the state, so track each uncashed paycheck. Notice rules differ by state. Washington requires a notice by first-class mail 60-180 days before you file, for amounts of $50 or more, when you have a valid mailing address for the employee.
- 01
Measure the dormancy period for each uncashed paycheck from the date the wages became payable, or from a later indication of interest where the state counts one.
- 02
Notify the employee as the state requires before you file the report.
- 03
File the report with the state that has custody, by that state’s deadline.
- 04
Remit the wages on the state’s schedule; Washington requires payment with the report.
Frequently asked
- California Code of Civil Procedure §1513, Escheat of Unclaimed Personal Property
- California Code of Civil Procedure §1530, Identification of Escheated Property
- Chapter 63.30 RCW, Revised Uniform Unclaimed Property Act
General information, not legal or tax advice. Apply current federal and state rules with qualified guidance.