Your Paycheck Bounced: What Now?

Photo (cc) by kristin wolff

The owners of a company I once worked for spent my paycheck on big-game hunting.

Well, maybe that isn’t exactly what happened, but my paycheck bounced the same week they decided to take an African safari tour. Up until that moment, it never occurred to me that a paycheck could come back marked insufficient funds.

Now that my ignorance bubble had burst, I had two choices: Deal with the situation or freak out. I first tried freaking out, but ultimately calmed down and realized that my employer couldn’t legally screw me.

I got the full paycheck, and you can too…

1. Call your employer

The first step sounds the simplest. It’s not.

Start by calling your employer and politely explaining the situation. If you’re lucky, someone in authority will apologize, make a few excuses, and cut a new check pronto. In my case, my boss replaced the check about a week later, but I still had to do a lot of legwork (basically, the tips mentioned below) to convince him I was serious about pursuing the matter.

So my advice: Before you make that call, play it safe and document everything. Write down who you spoke to, when you called, and what was said. Don’t threaten your boss, though. Just calmly drop into the conversation that you’ve looked into your options.

2. Call your bank

If your boss doesn’t do the right thing, you’ll need outside help – legal or governmental – to get your money back. And those folks will need written proof of the insufficient funds. That means copies of bank statements – and these days, not all banks mail these automatically.

The day my paycheck bounced, I called the toll-free number for my bank – which I found easily enough on the back of my debit card. I asked to speak to a representative in the “personal accounts department” and requested two things: a copy of the returned check showing the insufficient funds marker, and a copy of the current month’s bank statement showing the returned check and any overdrafts it caused.

I had to provide the representative with my checking account number, Social Security number, and telephone banking PIN to verify my account, but the statements arrived within a few business days.

3. Start a paper trail

It hopefully won’t get this far, but if you find yourself standing in front of a judge one day, you’ll need to prove your claim. After speaking to my employer, I called the legal aid office in my area. (Legal aid operates by state, but your closest office is a quick web search away.)

The lawyer I spoke with told me I may end up having to take my employer to small claims court and that I should start a paper trail proving my case. So I made a “bad paycheck” folder and started collecting documentation – like the paycheck stub and the insufficient funds notice from my bank.

4. Cover your debits

If you have any upcoming automatic payments, make sure you have enough money in your account to cover them. If you don’t have the funds, cancel the automatic payments. You can do so through your online banking account (if the payments go out from your bank) or by calling your creditor directly (if the payments were set up through them).

If you have upcoming bills but don’t have the funds, call the creditor and explain your situation. Some creditors are willing to give you an extra grace period if you’ve been a stellar customer in the past.

5. Damage control

You might not have time to cancel the automatic payments. In my case, I had set up several bill payments to go through the same day as my paycheck, most of which didn’t clear my checking account. If it happens to you, do some damage control. Contact your creditors, explain what happened, and ask if they’ll give you a pass and not penalize you with things like fees or negative reports to credit bureaus.

If you fail to make a timely payment on a bill that may reflect negatively on your credit history – like a mortgage or credit card – you might want to take an additional step: Write a letter explaining your situation and asking the creditor not report your late payment to the credit bureaus. Here is a template…





I spoke with you (OR YOUR DEPARTMENT NAME) on DATE regarding a late payment posted to my account. I am contacting you today to follow up on my request that this late payment not appear on my credit report with the three credit reporting agencies – Equifax, TransUnion and Experian. As I explained during our phone conversation, the reason your payment arrived late was an event beyond my control: my paycheck bounced.

I have been a customer for NUMBER OF YEARS. During my time with COMPANY NAME, I have had virtually no late payments, and would like to keep it that way.

Considering my excellent payment history and NUMBER years of customer loyalty, I hope you will consider completing this request on my behalf. This late payment was an isolated incident, and I look forward to a long customer relationship with COMPANY NAME.

Thank you for your time and consideration.

I look forward to your reply.



Once you write your letter, make a copy for yourself and send the original to your creditor through certified mail. You should receive a response to your inquiry within 30 days.

6. Report your employer

If your employer isn’t willing to work with you, report the company to the Department of Labor office in your state. Your specific legal remedies will depend on where you live – but almost invariably, your employer has to make good. Once you file a complaint, the labor office may be able to help you recoup your losses. You can find the contact information for your state by searching the U.S. Department of Labor’s Services by Location site. This site has links to labor laws in your state, as well as a list of offices.

7. Call a lawyer

In addition to having its own labor office, each state also has its own set of labor laws, and you’ll need to contact a lawyer to find out what rights you have. For example, you may have a right to “penalty damages” from your employer depending on where you live. California requires employers to pay extra wages after a paycheck bounces, according to the Legal Aid Society of San Francisco

Your employer is required to have enough money in the bank (or a credit arrangement) to cover your paycheck for 30 days after the date it is issued. If your employer’s check bounced, and you attempted to cash or deposit the check within 30 days of receiving it, you can collect a penalty from your employer. If your employer doesn’t pay you the owed wages immediately after the check bounces, it will owe you an extra day of wages for each and every day you remain unpaid (in addition to the amount of the paycheck itself).

A lawyer can also review your case and help you determine the best course of action. In some cases, the lawyer may be able to make a phone call and negotiate with your employer directly. In other cases, you’ll need to go to small claims court. Either way, bring your documentation folder with you when you visit the lawyer – having all that paperwork will only help your case.

Unfortunately, lawyers cost money. If you qualify as low-income in your state, you can get assistance from Legal Aid – it offers free or low-cost consultations and may be willing to send a lawyer to court on your behalf.

8. Call your employer (again)

Sometimes people just need to know you’re serious. After you’ve gone through any or all of the motions I’ve just mentioned, try contacting your employer again. They might be more willing to work with you once they realize you’re familiar with the law. In my case, my employer replaced the paycheck (and covered the insufficient funds fees) after my second call.

When you do call, get straight to the point, state all the facts, and explain that you’ve contacted the labor department and a lawyer. And don’t forget to keep it professional – some employers tape phone calls. To give you an idea, my phone call went something like this:

“Hello, I spoke with you five days ago regarding my paycheck that I was unable to cash due to insufficient funds in your account. In addition to the missing paycheck funds, I’ve also received a $25 insufficient funds fee as well as three $35 overdraft fees due to unpaid debits from my account after the check failed to clear. While you were unable to help me during our first phone call, I’d like to inform you that I’ve received proper documentation from my bank and spoke with both the Labor Department and my lawyer – who clarified both my rights as well as your responsibilities under the law. Now that I’ve gotten that cleared up, and you’ve had time to catch up after your big-game hunting trip, I was wondering if you could be of more assistance.”

Amazingly enough, my boss was full of apologies and happy to issue a new paycheck. If your employer still won’t play ball, document the call and contact your lawyer again. While you might be headed toward a legal battle, you will get your money.

And if it gets that far, you should start looking for another job. In that case, check out 10 Ways to Ace Your Next Job Interview.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
3 Ways to Get Paid for Searching the Web

If you’re already doing it anyway, why not get rewarded for it? Here are three great opportunities.

Homeowners Say These 2 Kitchen Appliance Brands Are Best

One brand takes five of the top honors, while another ranks highest in three categories.

9 Forgotten Frugal Strategies — and How to Resurrect Them

These time-tested methods can help us live smarter today.

6 Ways to Guarantee Yourself a Steady Retirement Income

Saving is just one part of the retirement equation. Do this now to guarantee income in your golden years.

9 Hidden Ways to Get More Out of Amazon

You don’t have to be a Prime member to take advantage of these little-known perks of shopping on Amazon.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

8 Tips for Retiring Comfortably on Social Security Alone

It’s never too early to start learning how to live well while living on less.

Am I Eligible for My Mother’s Social Security Benefit?

Can an adult daughter tap into her late mother’s benefit?

11 Generic Products You Should Buy at Costco

Not all generics are worthwhile, but these are among the best from Costco’s Kirkland Signature brand.

9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

This Surprise Factor Can Raise Your Risk of Dementia

Nearly half of U.S. residents may face this threat.

3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

Organize Your Home With These 10 Thrift Store Finds

Resolve to be clutter-free in 2021 with these secondhand purchases.

This Gas Station Scam Is Victimizing More Drivers

For the second straight year, a growing number of Americans believe they’ve fallen prey to this scam.

11 Laws You Could Be Breaking Without Knowing It

Seriously? Fibbing about the weather is a crime? This and other little-known legal traps await the unwary.

6 Legal Documents Retirees Need — but Don’t Have

Few retirees have all of these documents that are crucial to their golden years — especially during a pandemic.

These Are the 3 Best Used Cars You Can Buy

These vehicles boast reliability, safety and long-lasting value.

Can a Divorced Widow Claim Her First Husband’s Social Security Benefits?

The rules are complicated when it comes to eligibility for survivors benefits.

27 Things You Should Never Pay For — and How to Get Them for Free

When you know the tricks, you can save big on all kinds of useful things that others pay for.

15 Amazon Purchases That We Are Loving Right Now

These practical products make everyday life a little easier.

13 Things Seniors Can Get for Free — or Almost Free

There are many ways to get cheap or free services and goods after reaching a certain age.

Internet Providers Can’t Charge You for This Anymore

Starting this month, your ISP no longer can bill you for this fee.

10 Things I Always Buy at Trader Joe’s

From snacks to sweets to side dishes, stock your cart with these time-tested favorites on your next TJ’s run.

9 Small Expenses That Are Bleeding Your Budget Dry

Keep more of future paychecks by eliminating these budget-busting unnecessary expenses.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.