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  Home >> Checks/Money Orders  
Can Employer act as a Bank?

Can employers cash checks for their employees? For example: a payroll check payable to A, signed by B, both A and B endorsed the back, but only B is present while cashing in same bank that check is drawn.


The practice you describe is actually very common, except for cashing the check at the bank. Most banks require that the employer deposit the checks and draw a check from the business account to replenish the cash paid out to the employees.

A variation on that idea is for the employees to endorse their checks and hand them to a trusted designated runner, who will take them all to the bank to be individually cashed. When the employer has made prior arrangements with the bank, this option can work quite well.

A better option than either of those is for the employer to provide direct deposit of payroll to its employees. There's no need for check cashing, and employees can get whatever cash they need at a convenient ATM.

Published on BankingQuestions.com 10/27/09