Final Paycheck

Whether an employee quits a job or is fired, the employer still owes them a final paycheck for any worked hours for which they have not yet been reimbursed. At the least, a former employee is owed hourly minimum wages, and perhaps even vacation pay. Although most states have their own laws regarding minimum wages and the last paycheck, there are still regulations that must be followed.

What’s Included in the Final Paycheck?
A departing employee's last paycheck must contain compensation for any back pay, including minimum wage (or agreed upon hourly wage) and any applicable overtime pay. In some states, the final paycheck also includes expenses, sick pay, and the total vacation pay that has been accrued by the worker during the term of their employment.

Final pay may also include commissions or bonuses, if appropriate. If an employee is terminated, rather than quitting their job voluntarily, they may also be eligible for severance pay.

When is the Final Paycheck Due?
Depending on local employment labor laws, the last paycheck must be given to the departing employee within 72 hours or, sometimes, within 15 days – normally on the same day that a staff member would have received a check if they were still employed. Other states require that the final paycheck is handed over immediately when an employee is fired.

Some states take advance notice into consideration when determining final pay regulations, choosing to give departing employees their last paycheck immediately if they have announced their resignation a certain number of days before leaving.

Under no circumstances is it permissible for employers to hold final pay "ransom." Even if the employer is seeking a return of property, information, or a signature on a release document, it is illegal to hold a final paycheck as a bargaining chip.

Failure to comply with state and federal final pay laws can be costly for employers if former employees should decide to sue. If a last paycheck is not distributed in the proper manner, former employees are entitled to twice their unpaid pay plus legal fees, and legal attention may trigger an audit of all of the company’s policies.

Although these final pay laws don’t pertain to independent contractors, businesses should be careful to accurately classify their workers to avoid violating any employment laws.

If you’re a terminated employee who has been denied a final paycheck, it’s a good idea to contact an employment lawyer to discuss the specifics of your situation.: