B-204110.OM, JAN 28, 1982

B-204110.OM, JAN 28, 1982

SUBJECT: PROCEDURE TO BE FOLLOWED FOR CHECKS ISSUED PRIOR TO OR SUBSEQUENT TO THE DEATH OF AN EMPLOYEE. DIGEST: 1. DEATH OF EMPLOYEE REVOKES AUTHORITY OF BANK TO RECEIVE PAYCHECK OF EMPLOYEE AND DEPOSIT CHECK TO EMPLOYEE'S ACCOUNT. BANK MUST RETURN PAYCHECK TO DISBURSING OFFICE WHICH THEN SHOULD ISSUE NEW CHECK TO APPROPRIATE INDIVIDUAL PURSUANT TO 5 U.S.C. SEC. 5582(B). 2. PAYCHECKS ISSUED AFTER DEATH OF EMPLOYEE SHOULD BE RETURNED TO DISBURSING OFFICE WHICH THEN SHOULD ISSUE A NEW CHECK PURSUANT TO 5 U.S.C. SEC. 5582(B). SEE 31 C.F.R. SEC. 240.10(B).

JEFFREY FORMAN - OFFICE OF GENERAL COUNSEL:

COULD YOU PLEASE ANSWER THE FOLLOWING QUESTIONS AS THEY RELATE TO THE APPLICABLE STATUTES?

A) IF AN EMPLOYEE DIES BEFORE PAYDAY BUT AFTER THE CLOSE OF THE PAY PERIOD, WHAT HAPPENS TO HIS/HER CHECK:

1) IF THE CHECK IS SENT TO A BANK?

2) IF THE CHECK IS SENT TO HOME OR ANOTHER ADDRESS?

B) IF AN EMPLOYEE DIES AFTER PAYDAY BUT BEFORE CHECK IS RECEIVED AND DEPOSITED, WHAT HAPPENS TO THE CHECK?

THANK YOU FOR YOUR TIME AND ATTENTION IN THIS MATTER.

INDORSEMENT

CHIEF, FMB, OFM

RETURNED. THE BASIC ANSWER TO YOUR QUESTIONS IS THAT PAYMENTS NOT MADE BEFORE AN EMPLOYEE'S DEATH MUST NOT BE MADE IN THE USUAL MANNER BUT TO THE INDIVIDUAL ENTITLED TO PAYMENT UNDER 5 U.S.C. 5581-5584. AS TO QUESTION A THE HEAD OF AN AGENCY MAY SEND TO A BANK AN EMPLOYEE'S PAYCHECK DRAWN IN FAVOR OF THE BANK FOR CREDIT TO THE CHECKING OR SAVINGS ACCOUNT OF THE EMPLOYEE. SEE 31 U.S.C. SEC. 492(B)(1). THE BANK RECEIVES THE CHECK AS THE AGENT OF THE EMPLOYEE WHO HAS DESIGNATED THE BANK TO RECEIVE THE CHECK AND CREDIT HIS OR HER ACCOUNT. UPON THE DEATH OF THE EMPLOYEE, THE BANK'S AUTHORITY TO CREDIT THE EMPLOYEE'S CHECK IS REVOKED AND THE BANK MUST RETURN THE CHECK TO THE ISSUING OFFICE. IF THE ORIGINAL CHECK IS NOT AVAILABLE, THEN THE BANK SHOULD SEND ITS OWN CHECK IN THE AMOUNT OF THE EMPLOYEE'S CHECK. 31 C.F.R. SEC. 209.9.

THUS, UPON THE DEATH OF AN EMPLOYEE, THE DISBURSING OFFICE SHOULD IMMEDIATELY NOTIFY THE BANK AND REQUEST RETURN OF THE PAYCHECK OR A BANK CHECK OF THE SAME AMOUNT OF THE PAYCHECK. OF COURSE, THE MONEY DUE THE EMPLOYEE IS NOT RETAINED BY HIS EMPLOYING AGENCY BUT IS PAID PURSUANT TO 5 U.S.C. SEC. 5581-5584, WHICH SPECIFIES THE PROCEDURES FOR PAYMENT OF UNPAID PAY AND ALLOWANCES OF A DECEASED EMPLOYEE.

IF A PAYCHECK IS MAILED TO A DECEASED EMPLOYEE (PAYEE), THEN THE CHECK MUST BE RETURNED TO THE DISBURSING OFFICE. SEE 31 C.F.R. SEC. 240.10(B). THUS, THE DISBURSING OFFICE SHOULD CONTACT AN APPROPRIATE INDIVIDUAL, MEMBER OF DECEASED'S IMMEDIATE FAMILY OR DECEASED'S PERSONAL REPRESENTATIVE, TO SO ADVISE THEM. AGAIN, THE DISBURSING OFFICE WOULD ISSUE A NEW CHECK PURSUANT TO 5 U.S.C. SEC. 5581-5584.

AS TO QUESTION B THE ANSWERS TO QUESTION A ARE EQUALLY APPLICABLE HERE. THE CRITICAL FACT IS NOT WHETHER THE EMPLOYEE DIED BEFORE OR AFTER PAYDAY, BUT WHETHER HE DIED BEFORE HE OR HIS BANK INDORSED THE CHECK. ANY UNINDORSED CHECK MUST BE RETURNED SINCE THE DEATH OF THE EMPLOYEE WOULD PRECLUDE A VALID INDORSEMENT. SEE GENERALLY, 31 C.F.R., PARTS 209 AND 240.