How Long Is a Company Check Good For?

Imagine this scenario: You found a check from a company that was written to you several months ago, maybe even over a year. Should you cash it? Are you still eligible to deposit that money, or is the check considered void? These are important questions that many people face. In this article, we will unravel everything you need to know about the lifespan of company checks, what happens when they expire, and what actions to take if you are holding onto one that's past its due date. This information is critical for both employees and businesses to ensure they handle checks responsibly.

The Short Answer

In most cases, a company check is good for six months. After that period, banks can consider it stale-dated, meaning they may refuse to cash or deposit it. However, the exact time frame can vary depending on the issuing bank, state laws, and company policies. Some companies may state specific expiration terms on the check itself.

Why Does This Matter?

A company check is a legal document representing money owed to you. However, just like any legal document, it comes with conditions. If you don’t cash or deposit the check within a certain period, you could lose your right to that money. Six months is the industry standard, but understanding why this time frame exists and what happens if you miss it can save you a lot of trouble down the road.

What Is a Stale-Dated Check?

The term "stale-dated" refers to a check that has not been cashed within a certain time frame—usually six months. After this period, banks can reject the check, citing that it is outdated. But it’s important to note that this does not mean the check is void. The issuer (the company) still legally owes you the money, but cashing the check may become more complicated.

What Happens After Six Months?

Once a check becomes stale-dated, the responsibility to reissue or honor it falls back onto the company. In many cases, if you contact the company that issued the check, they can reissue a new one. Some companies may automatically void checks after a certain period to prevent fraud. However, if a company check expires, the issuer is still obligated to settle the payment unless there are specific terms stated on the check itself, such as “Void After 90 Days.”

Company Policies May Vary

Some companies may implement policies that are different from the industry standard. For example, they may include a note on the check such as "void after 90 days" or "not valid after 180 days." In these cases, the time frame on the check takes precedence over the typical six-month rule.

State Laws and Regulations

While most states follow the six-month rule, certain states have specific laws regulating the expiration of checks. These laws often relate to payroll checks or settlement payments. For example, in some states, payroll checks may need to be cashed within a year, while others allow for longer periods.

The Role of Banks

Banks are not legally required to cash checks older than six months, but they have the discretion to do so. If you bring a stale-dated check to your bank, they may refuse to honor it, or they may choose to accept it but place a longer hold on the funds. This is a security measure to ensure the check has not been voided or canceled by the issuing company.

What Should You Do If You Have an Expired Check?

First, don’t panic. Just because a check has passed its expiration period doesn’t mean the money is gone. The company still owes you the funds. Here’s what you should do:

1. Contact the Issuer
   Get in touch with the company that issued the check and ask for a new one. Most companies will have a process in place for reissuing checks, especially payroll or settlement checks.

2. Check the Company’s Terms
   Look at the check for any specific instructions regarding expiration. If the check says "Void After 90 Days," your best bet is to contact the issuer as soon as possible. The company may require additional documentation to verify the claim before issuing a new check.

3. Consider the State Laws
   Research state-specific laws regarding expired checks. Some states require companies to hand over unclaimed funds to the state after a certain period, which means you may need to file a claim through the state’s unclaimed property office.

The Importance of Cashing Checks Promptly

It may seem obvious, but the best course of action is to cash or deposit a company check as soon as you receive it. Holding onto checks for long periods increases the risk of them becoming stale-dated. Additionally, the longer you wait, the higher the chance that the company might have closed its bank account, canceled the check, or voided it for accounting reasons.

Payroll and Settlement Checks

Payroll checks are a special category of company checks. In the United States, federal law mandates that employers must pay employees for their work, and this payment cannot be voided just because a check has expired. If a payroll check has expired, the company is still obligated to reissue the payment, even if it means issuing a new check.

In the case of settlement checks, such as class-action settlements, the terms may be stricter. Often, settlement agreements will include clauses that specify how long recipients have to cash their checks. If you miss this window, you may forfeit your right to the settlement money, depending on the terms of the agreement.

What About E-Checks and Digital Payments?

In today’s world, many companies are moving toward electronic payments, such as e-checks, direct deposit, or online payment platforms. These types of payments typically do not "expire" in the same way paper checks do. However, there can still be time limits to claim funds. For example, if you receive an e-check, the issuer may place an expiration date on how long the digital link to the check remains active. It's always best to read any terms and conditions attached to these types of payments.

When Does a Check Become Unclaimed Property?

If you fail to cash a check and the company cannot reach you after a certain period, they may be required by law to hand over the unclaimed funds to the state. This process is known as escheatment. States have specific laws governing when property is considered abandoned or unclaimed, and once this happens, you must file a claim through the state’s unclaimed property office to recover the funds.

Preventing Issues with Expired Checks

Here are a few best practices to avoid issues with expired checks:

• Cash or deposit checks immediately after receiving them.
• Keep records of all payments received via check.
• Contact companies immediately if you haven’t received a check that was promised to you.
• Read the fine print on checks to understand any expiration terms.
• Check your mail frequently to avoid missing important checks.

In Conclusion

So, how long is a company check good for? The simple answer is six months for most checks, but it’s essential to be aware of company-specific policies, state laws, and the possibility of checks being voided or becoming unclaimed property. Don’t let your money slip through the cracks—cash those checks promptly, and if you do find an expired one, rest assured that there are steps you can take to recover your funds.