{"data":{"id":"us-ky/krs-355.3-405","jurisdiction":"us-ky","citation":"KRS 355.3-405","heading":"Employer's responsibility for fraudulent indorsement by employee.","body":"(1) In this section:\n(a) \"Employee\" includes an independent contractor and employee of an\nindependent contractor retained by the employer;\n(b) \"Fraudulent indorsement\" means:\n1. In the case of an instrument payable to the employer, a forged\nindorsement purporting to be that of the employer; or\n2. In the case of an instrument with respect to which the employer is the\nissuer, a forged indorsement purporting to be that of the person\nidentified as payee;\n(c) \"Responsibility\" with respect to instruments means authority:\n1. To sign or indorse instruments on behalf of the employer;\n2. To process instruments received by the employer for bookkeeping\npurposes, for deposit to an account, or for other disposition;\n3. To prepare or process instruments for issue in the name of the employer;\n4. To supply information determining the names or addresses of payees of\ninstruments to be issued in the name of the employer;\n5. To control the disposition of instruments to be issued in the name of the\nemployer; or\n6. To act otherwise with respect to instruments in a responsible capacity.\n\"Responsibility\" does not include authority that merely allows an employee to\nhave access to instruments or blank or incomple te instrument forms that are\nbeing stored or transported or are part of incoming or outgoing mail, or similar\naccess.\n(2) For the purpose of determining the rights and liabilities of a person who, in good\nfaith, pays an instrument or takes it for value or for collection, if an employer\nentrusted an employee with responsibility with respect to the instrument and the\nemployee or a person acting in concert with the employee makes a fraudulent\nindorsement of the instrument, the indorsement is effective as the i ndorsement of\nthe person to whom the instrument is payable if it is made in the name of that\nperson. If the person paying the instrument or taking it for value or for collection\nfails to exercise ordinary care in paying or taking the instrument and that fa ilure\nsubstantially contributes to loss resulting from the fraud, the person bearing the loss\nmay recover from the person failing to exercise ordinary care to the extent the\nfailure to exercise ordinary care contributed to the loss.\n(3) Under subsection (2 ) of this section, an indorsement is made in the name of the\nperson to whom an instrument is payable if:\n(a) It is made in a name substantially similar to the name of that person; or\n(b) The instrument, whether or not indorsed, is deposited in a depositary  bank to\nan account in a name substantially similar to the name of that person.","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=33475","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:58:44Z","sha256":"7ca42828b42769c6b4d8d05de611ecf5de8433aeeb1dc23216ab9a94c4a1496f","source_id":"us-ky","stale":false,"prev":"us-ky/krs-355.3-404","next":"us-ky/krs-355.3-406"},"notice":"GroundRules: Original legal text. Not legal advice."}