As an employer, one of your responsibilities is ensuring that your employees receive their final pay in a timely and accurate manner after they are either terminated or put in their notice. Both federal and state laws dictate when and how an employer must provide their employees with their final pay.
 

Navigating these rules around final pay can be complex but, our HR pros at Vested HR can help you ensure you are abiding by the laws when the time comes for the final payment to an employee.  

 

manager handing over final pay to an employee
 

What is Final Pay?
 

“Final pay” refers to the payment an employer is required to provide to an employee when the employee has been terminated or is withdrawing from their position.
 

When is the Final Pay Due?
 

An employee’s final pay is due on the employee’s last day of work, or as soon as possible thereafter, depending on state law.  

 

In some states, like California, employees who are terminated must receive their final pay on the same day as their termination. In other states, like New York, employers have up to six days to provide final pay.  

 

It is crucial you are familiar with the laws of your state and in cases where the employee may be in a different state, the laws of the state your employee resides in.  

 

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How Must Final Pay be Delivered? 

 

The method of delivery for final pay also varies by state. Some states require that final pay be provided in person, while others allow for payment via mail or direct deposit. There are often various stipulations that change how the final paycheck is delivered such as whether or not the employee was terminated or if they resigned without any prior notice. 

 

As mentioned, always consult your state’s labor laws to be sure you are compliant with the correct delivery method. At Vested HR, we are in(Vested) in your success and can help you navigate such laws to stay in compliance.  

 

What Must be Included in Final Pay?
 

The components of final pay also vary by state but generally include the employee’s regular wages earned up until their last day of work, as well as any accrued and unused vacation time or sick leave.  

 

Some states, like California, will require employers to include any commissions or bonuses earned but not yet paid. 

 

It’s important to note that failure to comply with final pay rules can result in legal action against the employer, which may lead to costly fines and damages.
 

opening up a check from an employer in an envelope

Ensure Your Business Is Always Compliant with Vested HR 

 

Navigating final pay rules can be a daunting task for employers. That’s where Vested HR comes in. As a professional employer organization (PEO), we specialize in HR management and risk compliance and can help ensure that your business is complying with all state and federal labor laws, including those related to final pay.  

 

Don’t risk costly legal action – contact Vested HR today for professional HR management help.