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Do You Know the Final Paycheck Laws in Your State?

Human hands exchanging money - closeup shot
By George Khoury, Esq. | Last updated on

Managing a staff isn't easy, and letting a team member go can be one of the most difficult tasks for any manager or business owner. Unfortunately, it can also be one of the more legally complex and challenging tasks as well.

When you fire an employee, making sure you have the employee’s final paycheck ready can go a long way in avoiding exposure to liability. In many states, failing to pay an employee their final paycheck within a short period of time can lead to pretty severe penalties for the business.

Final Paycheck as Burn Relief

Terminations can be rather difficult on employees. If the termination is planned, and not in response to misconduct or some other unforeseen circumstance that requires immediate termination, employers will want to review their state’s laws about how long they have to provide that final paycheck. But as you might expect, employees who receive their final paycheck immediately will at least have that last bit of money to ease the pain. Most states have laws that require the prompt payment of all money owed after termination because it’s simply fair, and the right thing to do.

Don’t Get Burned When Firing

Firing an employee, or even one quitting, will always have legal risks, but providing a timely final paycheck is one of the easiest ways to make sure you avoid getting hit with an unwinnable, and costly, claim.

For instance, in California, if an employee quits without notice, employers must cut them their final check within 72-hours. If the employer has more than 72-hours notice that the employee will be fired or quit, then the final paycheck must be provided immediately upon termination. Failing to do adhere to this rule can result in costly labor commissioner complaints which expose a business to penalties, fines, and, of course, the cost of providing their legal defense. In California, for every day an employer is late in providing that final paycheck, they will have to pay the employee an additional day of pay.

If you are considering a termination and don’t know your state’s laws governing final pay or other termination-related issues, consider contacting a local business attorney to get informed of your rights and responsibilities.

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