Unclaimed wages are a form of abandoned property that may become the property of the state. If your business has hourly workers or a transient workforce you are most likely to have unclaimed wages.
All states have laws on unclaimed property; most consider wages abandoned after one year. Employers holding outstanding wages must file reports and turn over the abandoned wages to the appropriate state agency. Generally, reports must be filed annually and must state the employee’s name, last known address, description and amount of the abandoned wages, date the wages became payable, and the date of the last transaction with the employee. You must attempt to contact the employee and must also take steps to prevent the unclaimed wages from becoming abandoned. Penalties are provided for noncompliance.
Unclaimed property should be remitted to the state of the last known address of the employee. This may or may not be the state in which your business is located. If there is no address, the funds should be returned to the state in which you are incorporated.
While unclaimed wages are likely your primary concern, you must also consider other items that need to be included in an abandoned property report. Examples include commission checks that are still outstanding, dividends paid to shareholders, accounts payable to vendors, or unredeemed gift certificates.