Our interactive guide allows you to look at last paycheck laws by state. You’ll also learn about all the pay requirements in place for employers upon any termination.
Final Paycheck Laws by State: What Employers Should Know by State
This article is part of a larger series on How to Do Payroll.
Final paycheck laws dictate how much time an employer has to issue a final paycheck after an employee has voluntarily resigned or been terminated. Federal law does not generally require employers to issue final paychecks immediately, so if your state does not have a specific law in place, you can pay terminated employees by the next scheduled payday.
State-by-State Final Paycheck Laws
Final paycheck laws vary by state—some, like California, require payment immediately, while others require payment within 15 to 21 days. Alternatively, a few (Alabama, Florida, Georgia, and Mississippi) do not have any statutes that address final paychecks. The Fair Labor Standards Act (FLSA) protects employees in these states, which requires employers to issue final paychecks on the next regular payroll day.
Only South Dakota allows employers to withhold final paychecks until the employee returns company property. In general, however, states require payment on an employee’s last day, within a certain number of days following resignation or termination, or on the payday immediately following an employee’s last day.
Click on the map below to learn the final paycheck requirements by state:
State-by-State
Final Paycheck Laws by Separation Type
Every employer must follow last paycheck laws, and you must follow the law of the state where the employee resides. In addition to variations in state requirements, final paycheck laws often differ depending on whether an employee resigns or is terminated. For this reason, it’s important to understand state requirements when deciding how to terminate an employee.
Cautions and Penalties When Issuing Final Paychecks
If an employer fails to comply with payroll requirements, it could be subject to a number of financial or legal penalties. For example, in California, employers who fail to issue a final paycheck on time are subject to waiting time penalties.
This means that, in addition to the outstanding paycheck, the employer may be required to pay the former employee wages for each day the paycheck is late under state law. Other states may require employers to pay double if they miss the statutory deadline for paying a final paycheck for a terminated employee.
Keep in mind the things that you generally cannot do when issuing a final paycheck:
- Withhold unpaid wages
- Make a final paycheck conditional on an action by the employee (except in South Dakota, where you can hold the pay until the employee returns all company property)
- Withhold other types of compensation like vacation, bonus, commission pay
- Have the employee sign any document stating they won’t sue your company as a condition of receiving their final paycheck (you can attempt this through a severance pay agreement)
An employer that fails to issue a final paycheck in a timely manner may also be sued by its former employee. However, this is less common because the amount of a final paycheck may not justify the cost of hiring an attorney.
Best Practices for Processing Final Paychecks
It’s vital that you or your payroll department familiarize yourself with the final paycheck laws of every state where you have an employee. Consider these best practices for issuing final paychecks:
- Before terminating any employee, discuss your legal liability and exposure with your employment attorney.
- Add a written policy for issuing final paychecks in every state where you have workers as part of your offboarding process (and update it regularly).
- Set an annual reminder to update your payroll department on any legal changes.
- If you terminate an employee and need to issue a final paycheck quickly, you can print payroll checks online for free. If you use a provider to do payroll, be sure to give enough processing time to cut the check.
- Include all compensation required at final pay—wages, accrued and unused paid time off (check with your state laws, as some require PTO payout), bonuses, commissions, etc.
- If allowed, withhold any monies due from the employee on their final paycheck.
Final Paycheck Laws Frequently Asked Questions (FAQs)
Employers are required to submit payment to terminated employees within a certain timeframe depending on the state where the employee works. If former employees are not paid, they can file a complaint with their state’s labor department or the US Department of Labor’s Wage and Hours Division. This can result in legal action and fines for the employer.
If an employee in California is terminated, they should receive their final check immediately. If the employee voluntarily quits and gives at least 72 hours’ notice, they should receive their final check immediately. If no notice, the employer must pay them within 72 hours of their quitting.
While there are no federal laws that require employers to pay severance upon termination, there are some state laws that govern how severance pay is administered if it is offered. New Jersey is the exception. Any employer with 100 or more full-time employees is required to pay one week of severance pay for every year of employment.
Bottom Line
While the FLSA imposes general final paycheck requirements, more stringent laws are imposed at the state level and vary depending on whether an employee resigns or is fired. What’s more, final paycheck laws depend on an employee’s location—not the employer’s—so you may need to familiarize yourself with multiple laws if you have out-of-state employees.
