Fundamental Payroll Certification (FPC) Practice Exam

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What does "escheat" refer to in the context of payroll?

The process of unclaimed wages being turned over to the state

In the context of payroll, "escheat" refers specifically to the process whereby unclaimed wages or other financial assets are turned over to the state. This typically occurs when an employer has made efforts to contact an employee regarding unclaimed wages, such as final paychecks or earned bonuses, but has been unable to reach them after a specified period. Laws governing escheatment vary by jurisdiction and establish the required timeframe before an employer must report and remit unclaimed wages to the state.

This concept is important for employers to understand as failing to comply with escheat laws can lead to penalties and legal issues. Employers must keep accurate records and ensure they make diligent efforts to contact employees or beneficiaries regarding unclaimed wages before taking the necessary steps to escheat those funds.

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Deducting wages for unfulfilled employee duties

Transferring benefits to a deceased employee's estate

The procedure for compiling payroll records

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