Understanding Final Pay: A Guide for Employers
Last Updated on October 15, 2024
Final pay is a critical aspect of the employment relationship that employers must navigate carefully. Whether an employee resigns, is terminated, or is laid off, understanding the intricacies of final pay is essential to ensure compliance with applicable laws and to maintain positive employer-employee relations. Here’s what employers need to consider regarding final pay.
Assessing Company Policies
Upon receiving a resignation notice, the first step for an employer is to review their internal policies regarding notice periods and final pay. If your company has a notice policy, it is crucial to determine whether the employee followed it. Additionally, if the employee has an employment contract, you must assess how that contract influences the final pay process.
Legal Compliance is Key
Regardless of the circumstances surrounding the employee’s departure, adherence to federal, state and local employment laws is non-negotiable. Employers should consult with a human resources professional to ensure compliance with all relevant regulations. Key considerations include:
Accrued Wages and Bonuses
Employers must ensure that the final paycheck includes all accrued wages, commissions and any bonus payments stipulated by contract or law. This not only helps maintain legal compliance but also demonstrates fairness and transparency to the departing employee.
Timely Payment
All states have specific laws regarding the timeframe in which final paychecks must be issued, whether that is through state laws or the Fair Labor Standards Act (FLSA).
Final Pay Laws by State
| State | Final Pay Law |
| Alabama | No specific law; final pay due on the next regular payday. |
| Alaska | Pay due within three days of separation. |
| Arizona | Pay due on the next regular payday. |
| Arkansas | Pay due on the next regular payday. |
| California | Pay due immediately if terminated; if resigned, pay due within 72 hours. |
| Colorado | Pay due within 24 hours of separation. |
| Connecticut | Pay due on the next regular payday. |
| Delaware | Pay due on the next regular payday. |
| Florida | No specific law; final pay generally due on the next payday. |
| Georgia | No specific law; final pay generally due on the next payday. |
| Hawaii | Pay due on the next regular payday. |
| Idaho | Whichever is first: within 10 days or next payday. If employee provides a written request for earlier payment, within 48 hours of receiving the request. |
| Illinois | Immediately, if possible, but no later than the next regularly scheduled payday. |
| Indiana | Pay due on the next regular payday. |
| Iowa | Pay due on the next regular payday. |
| Kansas | Pay due on the next regular payday. |
| Kentucky | Whichever is later: within 14 days or next scheduled payday. |
| Louisiana | Whichever is first: next scheduled payday or within 15 days. |
| Maine | Whichever is first: next scheduled payday or within 2 weeks of employee’s demand. |
| Maryland | Pay due at the next regular payday. |
| Massachusetts | Pay due at the next regular payday. |
| Michigan | All wages earned are due as soon as the amount can be determined. |
| Minnesota | Next payday that’s at least 5 days after an employee’s last day but no more than 20 days after the last day worked. |
| Mississippi | No specific law; generally due on the next payday. |
| Missouri | Pay due on the next regular payday. |
| Montana | Whichever is first: next scheduled payday or within 15 days of separation. |
| Nebraska | Whichever is first: next scheduled payday or within 2 weeks. |
| Nevada | Whichever is first: next scheduled payday or within 7 days. |
| New Hampshire | Next scheduled payday, or within 72 hours if the employee gives one period pay notice. |
| New Jersey | Pay due on the next regular payday. |
| New Mexico | Pay due on the next regular payday. |
| New York | Pay due on the next regular payday. |
| North Carolina | Pay due on the next regular payday. |
| North Dakota | Pay due on the next regular payday. |
| Ohio | Whichever is first: next scheduled payday or within 15 days. |
| Oklahoma | Next scheduled payday, or within 14 days, whichever is later. |
| Oregon | Pay due immediately if employee gave 48 hours’ notice, or within 5 days of separation or the next scheduled payday; whichever comes first. |
| Pennsylvania | Pay due on the next regular payday, or by certified mail if requested. |
| Rhode Island | Pay due on the next regular payday. |
| South Carolina | Within 48 hours or next scheduled payday, not to exceed 30 days. |
| South Dakota | Next scheduled payday, or the employer can hold the final pay until company property is returned. |
| Tennessee | Within 21 days or the next regular payday, whichever occurs later. |
| Texas | Pay due on the next regular payday. |
| Utah | Pay due on the next regular payday. |
| Vermont | Whichever is first: next scheduled payday or if there is no regular payday, then the next Friday. |
| Virginia | Pay due on the next regular payday. |
| Washington | Pay due on the next regular payday. |
| West Virginia | Pay due on the next regular payday. |
| Wisconsin | Pay due on the next regular payday. |
| Wyoming | Pay due on the next regular payday. |
Understanding these timelines is crucial for compliance and to avoid potential penalties.
Accrued Benefits
Employers should also account for any accrued benefits, such as vacation or sick pay, and ensure these are paid out in the final paycheck as required by state law or company policy.
Providing Required Notifications
Employers must provide all necessary legal notices to departing employees. This may include information about unemployment benefits, workers’ compensation and COBRA (Consolidated Omnibus Budget Reconciliation Act) continuation coverage. Failing to provide these notices can lead to complications and potential legal challenges.
Review Employment Agreements
Before finalizing the departure process, employers should review any employment, non-compete, or confidentiality agreements the employee signed. It’s important to reiterate the terms of these agreements to ensure the employee understands their obligations post-employment.
Transition Considerations
Whether to allow an employee to work through their notice period often depends on the workload and the necessity of a smooth transition. If the employee’s contributions are essential during the notice period, employers should facilitate a transition plan to hand off responsibilities effectively. However, if the decision is made to terminate the employee immediately, this should be done respectfully and in compliance with the relevant laws.
Final Thoughts on Navigating Final Pay
Handling final pay appropriately is crucial for maintaining a positive workplace culture and ensuring legal compliance. By taking the time to review company policies, adhere to legal requirements and facilitate a respectful transition, employers can navigate the complexities of final pay with confidence.
For further guidance and support with final pay and HR-related topics, consider partnering with MyHRConcierge. Our team of experts is here to help you stay updated on laws and best practices, fostering a fair and transparent work environment for all employees. For more information, contact MyHRConcierge at 855-538-6947 ext.108, ccooley@myhrconcierge.com. Or, schedule a convenient consultation below: