The Department of Industrial Relations (DIR) traditionally managed and distributed unclaimed funds to employees from California employment class action lawsuits. However, the DIR recently announced it will no longer accept checks from settlement administrators, plaintiffs, or defendants arising from private litigation in which the Labor Commissioner was not involved. As a result, any checks the DIR receives dated after Oct. 15, 2018 will be returned.
This means that unclaimed funds in California employment settlements with no designated cy pres recipient or reversion to the defendant will be handled by the California State Controller’s Office’s Unclaimed Property Division. Therefore, California employment settlement agreements must detail how unclaimed funds will be handled, exclusive of the DIR.
California’s Unclaimed Property Law requires entities holding property belonging to another person to pay those funds to the Unclaimed Property Fund. The goal of California’s Unclaimed Property Law is to reunite lost and abandoned property with its rightful owner. If a settlement fund still contains money belonging to specific class members in an employment case after the check cashing deadline has passed, those funds should be electronically transferred to California’s Unclaimed Property Fund. Transferring funds to California’s Unclaimed Property Fund is a multi-step process that requires a settlement administrator with experience handling residual funds in employment settlements.
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