withholding workers pay?

This will vary based on state law. Unless the employer has a clear policy that states employees are not to accept checks, I don't think the employer has a leg to stand on here.

The employer is the one who was shorted, and the employer is responsible for collecting the funds. There are many ways this can be done.

This employer should be thrown in jail! I would call the the main company which you know who that is and tell them. Also you should tell the employer what you will do. that is against the law. Make sure they get deported back to india. They may fire you but you could collect unemployment and then tell unemployment that they would take money from your pay and not prosecute the bad check passer.

Well, if the employee has been instructed NOT to take checks...then the employee would need to reimburse the business the amount lost. The employee can then go after the customer for the bounced check. Passing bad checks can get you thrown in jail quickly. The customer has good reason to cover the check if the police are after them.

An employer may not withhold an employee's paycheck. Any NSF liability is the company's business, not the employee's.

Possibly but it can as said vary from State to State.