Let's say an employee walks into your office and gives you two weeks notice that he is quitting. Your policy does not require two weeks notice, and because of the sensitive nature of the work he provides, you prefer to terminate his employment that same day. Is his paycheck, including all earned and accrued vacation or paid time off (PTO), ready when you tell him that you do not need the two weeks' notice? If the answer is no, you'd better hurry!
You hire a temporary employee to move your files to a new file room. She only works for you for one day. At the end of the day, you should have her paycheck ready to hand to her as she walks out the door.
A final paycheck is due immediately, upon termination - on the final day of employment - if the employee quits with more than 72 hours notice, or if you terminate the employee. You may use direct deposit if the employee currently receives pay in that manner, but the paycheck is still due on the last day of employment. Commissions, bonuses and expenses may all be paid on the timeline stated in your policy.
If an employee quits with less than 72 hours notice, you must provide the final paycheck within 72 hours after receiving notice from the employee. You may mail the final paycheck if the employee authorizes it in writing and designates a mailing address. The date of mailing is considered the date of payment for purposes of satisfying the 72-hour requirement. You may use direct deposit if the employee currently receives pay in that manner, but the paycheck must still be deposited within 72 hours after receiving notice.
You are only required to provide pay until the last day of employment plus any accrued vacation or PTO in the final paycheck. An exempt employee whose last day is in the middle of the workweek need only be paid through the last day, not for the entire workweek. Nonexempt employees only need to be paid for the time actually worked.
In any event, if you cannot have the final paycheck processed within these time requirements, you should pay the employee through the date that the check is processed to avoid costly fines and penalties for withholding of final pay.
Remember - never deduct monies owed to the company, or the cost of equipment, uniforms, etc. from the final paycheck.
For a helpful worksheet on preparing the final paycheck, go to Final Paycheck Worksheet. Also, a useful form to have employees sign, acknowledging receipt of their final paycheck, can be found at Final Paycheck Acknowledgment in English or Spanish.
What Should You Do?
- Always have the final paycheck ready according to these timelines to avoid costly penalties.
- Ensure your policies explain clearly when commissions, bonuses and expenses will be paid.
- Do not mail an employee's final paycheck unless the employee specifically authorizes you to do so - make sure you get the current address for the employee at that time as well.