Auto Cash Generators

I recently wrote a payroll check to a former employee who owes me money. She quits without saying a word and never shows up again. I then put a hold on the check because my account shows that this check has not posted yet but later I learned that she instead cashed it at a check cashing place. Now they are calling me for the payment of the check plus $25 fees. Can anyone tell me if I am responsible or the former employee to pay back this amount? Also they did not call to verify the check and can I be sue?

They are not required to call you to verify the check before they accept it. They likely called the bank to verify that the account is in good standing.
Your former employee is liable for paying back the check-cashing company.
You, on the other hand, are liable to your former employee for the amount of the check and any bank fees that she has to pay as a result of your stop payment.

The problem here is that you logically assume that you could stop payment of the payroll check because the employee owes you money on another matter. These, however, are two separate issues and the Department of Labor regulations do not allow you to withhold or deduct from paychecks in this manner. She worked for the company so the company owed her money for the hours worked. Period.
She owes you money, so you would need to pursue the matter through the court or collections.
Of course, you could sort the whole thing out and save everyone a lot of trouble if you pay the check-cashing place directly for the money they are asking. This leaves your former employee with no claim against you. You may then proceed with pursuing the debt that your former employee owes you.

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