When it comes to employment, the end of a working relationship can be just as important as the beginning. Whether you’re an employer or an employee, understanding the rules and regulations governing final pay is crucial. Final paycheck laws determine how and when an employee should receive their last paycheck upon termination or resignation. These rules can vary from state to state, and it’s important to be aware of the regulations in your jurisdiction. In this blog post, we’ll explore the concept of final pay and highlight some key points about the states with final pay rules.
What is Final Pay?
Final pay refers to the last paycheck that an employee is entitled to receive upon leaving their job. This payment typically includes any outstanding wages, accrued vacation or paid time off, and sometimes other benefits or bonuses. Final paycheck laws are in place to ensure that employees are compensated fairly for the work they’ve done and to prevent disputes between employers and departing employees.
Key Aspects of Final Paycheck Laws
Final pay rules can cover various aspects, including the following:
- Timing of Payment: Different states have different rules regarding when a departing employee must receive their final paycheck. Some states require immediate payment, while others allow a specific number of days, typically within a certain time frame after termination or resignation.
- For Staffing Firms: This can be especially difficult for staffing firms that operate on timesheets for payroll data. That’s why having a reliable timesheet software is key to complying with this type of requirement.
- Workers out of state: If you have workers out of state these laws may require your payroll team to overnight checks to those employees swiftly, so having a defined process is key.
- Accrued Vacation or PTO: Many states require employers to include any unused and accrued vacation or paid time off in the final pay. However, not all states have this requirement.
- Unused Sick Leave: Some states may also mandate the inclusion of unused sick leave in the final pay, while others leave it to the employer’s discretion.
- Bonuses and Commissions: Rules regarding the payment of bonuses, commissions, or other incentives upon termination can vary. In some states, these payments are treated differently from regular wages.
- Direct Deposit and Payroll Cards: Some states have specific rules governing the use of direct deposit and payroll cards for final pay.
- Record-Keeping: Employers may be required to maintain records related to final pay for a certain period. This ensures transparency and compliance with the law.
States with Final Paycheck Laws
It’s important to know that final pay rules are primarily governed by state labor laws, so they can vary significantly depending on where you work. Here are some states and their general final pay regulations as of my knowledge cutoff date in January 2022:
Alaska (AK)
- Voluntary Resignation: Employees in Alaska that resign from their position must be paid their final paycheck on their next regular pay date.
- Involuntary Discharge: Employees in Alaska that are involuntarily terminated must be paid their final paycheck within 72 hours of their termination.
Arkansas (AR)
- Voluntary Resignation: Employees in Arkansas that resign from their position must be paid their final paycheck on their next regular pay date.
- Involuntary Discharge: Employees in Arkansas that are involuntarily terminated must be paid their final paycheck within 7 days of their termination.
Arizona (AZ)
- Voluntary Resignation: Employees in Arizona that resign from their position must be paid their final paycheck on their next regular pay date.
- Involuntary Discharge: Employees in Arizona that are involuntarily terminated must be paid their final paycheck within 7 days of their termination.
California (CA):
- Voluntary Resignation: Employees in California that resign from their position must be paid their final paycheck within 72 hours of giving notice of their resignation, or their day of discharge if they give 72 hours notice.
- Involuntary Discharge: Employees in California that are involuntarily terminated must be paid their final paycheck on their last day of employment.
Colorado (CO)
- Voluntary Resignation: Employees in Colorado that resign from their position must be paid their final paycheck on their next regular pay date.
- Involuntary Discharge: Employees in Colorado that are involuntarily terminated must be paid their final paycheck on their last day of employment.
Connecticut (CT)
- Voluntary Resignation: Employees in Connecticut that resign from their position must be paid their final paycheck on their next regular pay date.
- Involuntary Discharge: Employees in Connecticut that are involuntarily terminated must be paid their final paycheck on their last day of employment.
District of Columbia (Washington DC)
- Voluntary Resignation: Employees in DC that resign from their position must be paid their final paycheck within 7 days of their termination.
- Involuntary Discharge: Employees in DC that are involuntarily terminated must be paid their final paycheck on the next working day (business day).
Hawaii (HI)
- Voluntary Resignation: Employees in Hawaii that resign from their position must be paid their final paycheck on their final day of employment if they gave 2 weeks notice to their employer.
- Involuntary Discharge: Employees in Hawaii that are involuntarily terminated must be paid their final paycheck on their last day of employment.
Idaho (ID)
- Voluntary Resignation: Employees in Idaho that resign from their position must be paid their final paycheck within 48 hours if the employee requests it. If the employee does not request their final paycheck, it must be paid on the next regular payday, or within 10 days, whichever occurs sooner.
- Involuntary Discharge: Employees in Idaho that are involuntarily terminated must be paid their final paycheck within 48 hours if the employee requests it. If the employee does not request their final paycheck, it must be paid on the next regular payday, or within 10 days, whichever occurs sooner.
Massachusetts (MA)
- Voluntary Resignation: Employees in Massachusetts that resign from their position must be paid their final paycheck on their next regular pay date.
- Involuntary Discharge: Employees in Massachusetts that are involuntarily terminated must be paid their final paycheck on their last day of employment.
Michigan (MI)
- Voluntary Resignation: Employees in Michigan that resign from their position must be paid their final paycheck on their next regular pay date.
- Involuntary Discharge: Employees in Michigan that are involuntarily terminated must be paid their final paycheck on their next regular pay date.
Minnesota (MN)
- Voluntary Resignation: Employees in Minnesota that resign from their position must be paid their final paycheck on their next regular pay date.
- Involuntary Discharge: Employees in Minnesota that are involuntarily terminated must be paid their final paycheck on their last day of employment.
Missouri (MO)
- Voluntary Resignation: State law in Missouri does not address the timeline for final payment for employees that voluntarily resign from their position.
- Involuntary Discharge: Employees in Missouri that are involuntarily terminated must be paid their final paycheck on their last day of employment.
Montana (MT)
- Voluntary Resignation: Employees in Montana that resign from their position must be paid their final paycheck on their next regular pay date. HR policies have a written statement advising that final pay will be on the next regular pay date.
- Involuntary Discharge: Employees in Montana that are involuntarily terminated must be paid their final paycheck on their last day of employment, unless the company’s HR policy advises that the final paycheck will be paid on the next regular pay date.
New Hampshire (NH)
- Voluntary Resignation: Employees in New Hampshire that resign from their position must be paid their final paycheck within 72 hours of their resignation if the employee gives at least 1 week notice.
- Involuntary Discharge: Employees in New Hampshire that are involuntarily terminated must be paid their final paycheck within 72 hours of their termination.
New Mexico (NM)
- Voluntary Resignation: Employees in New Mexico that resign from their position must be paid their final paycheck on their next regular pay date.
- Involuntary Discharge: Employees in New Mexico that are involuntarily terminated must be paid their final paycheck on their last day of employment if demanded by the employee, or within 72 hours if not demanded on their final day of employment.
Nevada (NV)
- Voluntary Resignation: Employees in Nevada that resign from their position must be paid their final paycheck on their next regular pay date.
- Involuntary Discharge: Employees in Nevada that are involuntarily terminated must be paid their final paycheck on their last day of employment.
Oregon (OR)
- Voluntary Resignation: Employees in Oregon that resign from their position must be paid their final paycheck within 5 days unless they give 48 hours notice, in which case they must be paid on their final day of employment.
- Involuntary Discharge: Employees in Oregon that are involuntarily terminated must be paid their final paycheck on the 1st business day after their termination.
South Carolina (SC)
- Voluntary Resignation: Employees in South Carolina that resign from their position must be paid their final paycheck within 48 hours or their next regular pay date, whichever comes first.
- Involuntary Discharge: Employees in South Carolina that are involuntarily terminated must be paid their final paycheck within 48 hours or their next regular pay date, whichever comes first.
Texas (TX)
- Voluntary Resignation: Employees in Texas that resign from their position must be paid their final paycheck on their next regular pay date.
- Involuntary Discharge: Employees in Texas that are involuntarily terminated must be paid their final paycheck within 6 days of their termination.
Utah (UT)
- Voluntary Resignation: Employees in Utah that resign from their position must be paid their final paycheck on their next regular pay date.
- Involuntary Discharge: Employees in Utah that are involuntarily terminated must be paid their final paycheck within 24 hours of their termination.
Vermont (VT)
- Voluntary Resignation: Employees in Vermont that resign from their position must be paid their final paycheck on their next regular pay date.
- Involuntary Discharge: Employees in Vermont that are involuntarily terminated must be paid their final paycheck within 72 hours of their termination.
These regulations can change, so it’s essential to consult the latest state labor laws or seek legal advice to ensure compliance.
Can Someone Do this For Me?
Many organizations find complying with payroll and employment laws to be confusing, and too risky. Rather than focusing on solving these issues internally, many organizations opt to partner with an Employer of Record (EOR) service instead. EORs like FoxHire will employ the workers and handle all the employment related duties, including payroll, so that their clients don’t have to worry about final paycheck laws, or any complex employment law issues for that matter!
Conclusion
Understanding the final paycheck laws in your state is crucial for both employers and employees. Adhering to these rules not only ensures that employees receive their due compensation but also helps prevent legal disputes and potential penalties for employers. It’s essential to stay updated on the latest labor laws in your jurisdiction to ensure compliance. If you have questions or concerns about final pay, consider consulting with an employment attorney or your state labor department for guidance.
Disclaimer: FoxHire is not a legal advisory firm and the above post should not constitute or be interpreted as legal advice. You should consult an employment attorney for any specific legal advice or questions if you are considering termination of an employee.
