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
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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.
An involuntarily terminated employee is one who has been released from a company, instead of resigning, due to a number of circumstances, such as poor work performance, attendance issues, company policy violations, and more.
Several states require you to pay employees immediately upon termination. Check our map above to see if your state requires immediate payment. Others allow you anywhere from a few hours to a few days to the next available pay period. Learn more in our involuntary termination article.
Some companies need to terminate employees for reasons other than poor performance. In these cases, you may wish to provide the employee with a severance package—monies given either in a lump sum or within a certain number of pay periods.
If you provide a severance package to a terminating employee, you are not required to follow final pay laws. However, you are required to spell out the terms of the severance and abide by those provisions. Make sure you create a severance agreement and have the terminating employee sign before issuing any funds.
At some point in your company’s future, you may be forced to lay off employees. This is a type of termination, but has nothing to do with performance. It is downsizing the company to meet budgetary needs, or for seasonal reasons (such as a temporary shutdown during slow months).
When a layoff occurs, you will be required to abide by state final pay laws. This means that if your state requires immediate payment upon termination, then you will need to have checks ready for your employees prior to the official termination. However, as mentioned above, if you provide a severance during the layoff, you are not subject to final pay laws but are bound by the severance agreement’s terms.
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Did You Know? Furloughs are slightly different from a layoff. The furloughed employee is laid off for a specific amount of time, without pay, but then returns to their position. Learn more in our furlough vs layoff article.
When an employee resigns from their position or quits, you may or may not be given notice. In most states, payment for an employee who has quit is due on the next available pay period. However, some states do have other rules. For instance, in California, if the employee gives sufficient notice, they must be paid immediately on their final day.
If you use a payroll provider or software to pay your employees, keep in mind that some providers may be able to issue payroll with a same-day turnaround, however, many will require at least a day’s notice. It’s important to familiarize yourself with what final paycheck processes your provider has in place to ensure you’re in compliance.
Learn more about how to do payroll in our guide. And, understand important payroll laws you need to know through payroll compliance.
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)
What happens if I don't get paid after I quit?
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.
What is the 72 hour rule in California?
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.
Which states have severance pay laws?
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.
