You've collected, organized, and provided all of your tax documents to your accountant, sent out piles of W-2 Forms to employees and former employees, breathed a sigh of relief that your portion of work is done, and now W-2's are being returned as undeliverable. Now what?
What to do with undeliverable W-2's is a question that comes up frequently this time of year. The IRS guidance in regard to undeliverable W-2's is to retain them for at least 4 years. However, if the document can be produced electronically, you do not need to retain the returned printed W-2; you can provide the employee or former employee the electronic/printable version. However, we personally like the idea of retaining the document with the undeliverable stamp as a record that you did your due diligence in attempting to provide the document to all of your employees.
As for the rest of the year, this also comes up in regard to final wages. Keep in mind that payout of final wages varies by state and situation, but one thing that remains consistent is methods of delivering the check. First, you will want to make the check available at the worksite at the time and date it is due to the employee, as specified by your jurisdiction. Secondly, if the employee has not picked up the check, it is likely the next step to mail the check. In Colorado specifically, if the employee has not picked up the final check within sixty days after the wages or compensation were due at the worksite, the employer shall mail the employee’s check to the employee’s last-known mailing address. Keep in mind that in California, it is not advisable to mail the check unless the employee has given written authorization to do so. Please check guidance in your particular state.
If after one year, employees still have not claimed their wages due, employers must file an annual report of unclaimed wages with the State Treasury. At that point, the employer must pay the amount of the unclaimed wages to the State Treasury and provide notice to affected employees. In the state of Colorado employers must send a notice to the former employee no more than 120 days before the unclaimed wages are reported. More information about reporting unclaimed wages in the state of Colorado can be found here.
One situation we hope you never come across is having wages due to a deceased employee. In Colorado, upon the death of an employee, their final wages should be paid to an appointed personal representative of their estate. If nobody has been appointed, then wages should be paid to the surviving spouse. If there is no surviving spouse, the employer shall pay the wages to the next legal heir at the request of such heir. The employer also needs to require proof of the relationship between the deceased employee and recipient of final wages. This topic is a bit complicated, so again, please check guidance in your state as this can vary drastically. For Colorado employers, the full text can be found in articles 10 to 17 of title 15, C.R.S.
In all of the scenarios above, it is a best practice for the employer to document the steps taken to provide wages or documents to the employee. This can be a simple note attached to the document or paycheck outlining the dates and action that you took.
simplyHR is an HR consulting firm located in Fort Collins, CO providing partnerships to companies in all 50 states. Our goal at simplyHR is to provide training, education, partnership, and resources to make Human Resources simple for small businesses. We love HR so you can love what you do.
The content of this website provides practical and HR best practice information and is not legal advice. simplyHR LLC does not provide legal advice or other professional services. While every effort is made to provide accurate and current information, laws change regularly and may vary depending on the state and/or the municipality your business operates in. The information provided from simplyHR is provided for informational purposes and is not a substitute for legal advice or your professional judgement. You should review applicable federal, state and municipality laws in your jurisdiction and consult with legal counsel as you deem necessary.