BPHR’s Director Lisa Salcido, SPHR, SHRM-SCP provides answers to your pressing HR questions.
Question: We terminated an employee today and he asked for his final paycheck. We didn’t have it ready, were we required to pay him today?
Answer: There are many things to consider when terminating an employee including when their final paycheck is due. The requirement varies by state and whether the employee’s separation was voluntary or involuntary.
To determine when final pay is due follow the state law and be prepared to plan ahead. Federal law does not require employers to provide a paycheck immediately upon separation. However there are several states, such as Connecticut, Massachusetts and California, that require employers to pay employees who are fired, on their last day of work. In an immediate payment state, you must prepare the final paycheck in advance of the termination meeting. A late final payment would be a wage and hour violation subject to fines that will increase each day that the former employee waits for their paycheck.
Some states allow final pay to follow your regular pay schedule. Whether the employee quits or is fired, New York, New Jersey and Pennsylvania require the employer to pay the departing employee no later than on the next scheduled payday for the pay period during which the employee’s separation took place.
An employee’s final paycheck should include all compensation owed for hours worked including overtime, and payment for unused paid time off if your policy, or state law, mandates that it be paid out. Any earned commissions, bonus and severance payments should be processed according to the terms of the commission plan, severance agreement and state law.
If the employee was receiving their pay via direct deposit you are not required to issue a paper check for the final pay. Final wages can typically be paid via the method used on other paydays, but you can switch to a manual check if you prefer, as long as it is paid on time.
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DISCLAIMER: The material presented on this page is for informational purposes only and does not constitute legal advice or legal opinion.