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What is a business's liability regarding a fraudulent check?

Question Details: I own a small company. We issued a payroll check to an employee. He cashed the check and it cleared my bank several months ago. Yesterday, I received notice of dishonored check and demand for immediate payment for the amount of the check plus a $35 return check fee because the payee presented a fraudulent duplicate check to a different check cashing place and my bank returned the check because it already paid on the first one. A law firm claims that our company is liable for the second fraudulent check because it was written on our company check. Did our liability end after the legitimate check was cashed the first time or are we liable for the payee's criminal activity when they presented a fraudulent check that was returned by the bank?

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