While there are no federal laws regulating the payment of final wages, many states have enacted final pay laws.
California’s regulations regarding final pay are governed by both the Labor Code and enforced by the Dept of Industrial Relations.
Employees who are discharged must be paid all wages due at the time of termination.
This includes all accrued, but unused vacation time. Personal or floating day may, or may not fall under the required payment statute - depending on their use as it is determined by your company.
There is no requirement under California law that an employer pay accrued sick leave upon termination.
The rules guiding final payment are very specific:
- Direct deposits that were previously authorized by the employee are immediately terminated when an employee quits or is discharged
TERMINATION
- If an employee is discharged or terminated, they must be paid all wages due at the time of termination.
- For a discharged or terminated employee, payment must be made at the place of discharge (this means the employer may not use direct deposit, mail or ship the final check to the employee’s home)
- In some cases, if the employee works remotely, a messenger or overnight delivery service may be used to deliver the final check – as long as it arrives no later than the day of termination.
QUITTING
- An employee who does not have a written agreement for a definite period of employment, and who quits without giving prior notice, must be paid his or her wages within 72 hours.
- The employee may request that their final wage payment be mailed to a designated address
- The date of mailing sill be considered the date of payment
- If the employee gives at least 72 hours notice of his or her intention to quit, all wages must be paid at the time of quitting.
- The employee must be “paid at the office or agency of the employer, in the county where the employee worked”
PENALTIES
An employer who willfully fails to pay any wages due an employee who is discharged, or quits, within the specified time frames, may be assessed continuing daily wages as a penalty. The Waiting Time Penalty runs from the date the wages were due, up to a maximum of 30 days.
ACTION STEPS
- notify Human Resources as soon as you are aware that an employee is resigning or planning to resign
- if the final check is given to you for delivery, make sure you hand it to the employee on their last day