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?

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you go to AttorneyPages.com and retain an attorney to represent you.