Final paycheck laws by state

When an employee parts ways with a company, either by choice or due to termination, one of the most pressing questions is: when will they receive their final paycheck? The answer, it turns out, is not so straightforward. 

While federal law establishes a baseline for prompt payment, each state has its own specific requirements that employers must follow. Some states demand immediate payment upon termination, while others allow a bit more leeway. Some have different rules for voluntary vs. involuntary terminations. And then there are states with no specific final paycheck laws at all.

As an HR manager, navigating this patchwork of regulations can be daunting, especially if your company has employees across multiple states. But understanding and complying with final paycheck laws is crucial, because mistakes can lead to costly penalties and damage to your employer brand.  In this guide, we'll break down everything you need to know about final paychecks state-by-state.

What is a final paycheck?

Let's start with the basics. A final paycheck is the last payment an employer makes to an employee who is leaving the company, whether they quit, were laid off, or were terminated for cause. This paycheck should include all standard wages earned through the employee's last day of work, along with payment for any accrued but unused vacation time if required by state law or company policy.

It's important to distinguish final paychecks from severance pay. Severance is additional compensation that some employers choose to provide when laying off workers, often in exchange for a release of legal claims. It's a discretionary benefit, not a legal requirement like final wages earned.

Some common scenarios where you'll need to issue a final paycheck include:

• An employee submits their two weeks' notice and works through their planned end date

• An employee quits on the spot or walks off the job 

• An employee is terminated due to performance issues, misconduct, or company downsizing

• An employee retires after giving advance notice

• An employee goes out on permanent disability leave

In each case, the employee has already performed work for which they haven't yet been compensated. The final paycheck is what settles that account.

What factors affect final paychecks?

While all states require employers to provide a final paycheck comprising the wages owed, the deadline for delivering that check varies widely based on state law and several other factors:

• Reason for separation: One factor affecting final paycheck deadlines is whether the employee quit voluntarily or was terminated involuntarily. In general, most states that distinguish between the two scenarios give employers more time to cut a last check when an employee resigns. The rationale is that an employer may not have advance notice of an employee's resignation and needs time to process paperwork. However, if the employer initiates the termination, payment deadlines are often shorter, varying from immediate payment to the next working day, or just the next payday.

• Accrued vacation time: Another factor that can complicate final paycheck timing is accrued vacation or PTO. Many states require employers to pay out an employee's earned but unused vacation time in the final paycheck. Some states allow companies to exclude unused PTO in the final paycheck if this exclusion is explicitly stated in company policy. Where vacation payout is required, some states give more time to include it in a final check than for regular wages.

• Commissions and bonuses: If an employee has earned commissions or bonuses, those must be included in the final paycheck once the amounts can be determined. Most states recognize that this kind of compensation often can't be calculated right away. While base wages are due within the regular final pay deadlines, many states give employers until the next regular payday after commissions or bonuses can be calculated to include them in a final check.

• Unreturned company property: Some states allow employers to make deductions from final paychecks for unreturned company equipment, while others prohibit this practice. In states that permit deductions, employers must adhere to specific guidelines to ensure compliance with wage laws.

States without final paycheck laws

The vast majority of states have laws on the books dictating when a final paycheck must be provided. However, there are a few exceptions. The following states do not have specific final paycheck laws:

Alabama

Alabama has no specific state law governing when to pay employees after employment termination or resignation. However, federal law for final paycheck applies by default.

Florida

Florida final paycheck law is essentially nonexistent. The state doesn’t have specific laws on when employees need to be issued their final paycheck. However, employees can take legal actions for unpaid final wages according to the federal Fair Labor Standards Act (FLSA).

Georgia

Georgia provides no laws on when to pay employees their final check, but expects employers to adhere to the federal law. Employers have the flexibility of choosing any preferred payment means such as direct deposit, check, payroll card, in-person, or by mail.

Mississippi

Mississippi state law about employment and wages does not provide any information about how and when to pay employees’ final paychecks after employment termination or voluntary resignation. The federal FLSA regulation on final paycheck still holds in this case.

Missouri

For termination of employment, Missouri follows the Employment-At-Will doctrine, but expects an employer to pay a dismissed employee at the time of termination. However, if the employer doesn’t pay at dismissal, the employee can send a written request for unpaid wages to the employer via certified mail with a return receipt requested to prove the employer received it. Failure to pay within seven days will lead to additional wages until the employer pays for up to sixty days. Missouri does not have any final paycheck laws for voluntary termination.

Final paycheck laws by state

Now let's dive into the specific requirements in each of the remaining 45 states, plus a federal district, that do have final paycheck laws. Keep in mind these reflect the minimum requirements—employers can always choose to provide final pay sooner.

As you can see, some states have more employee-friendly laws than others. In immediate pay states like California, employees who are terminated must be handed their final paycheck on the spot. Colorado and Utah also have same-day requirements for fired workers. Oregon final paycheck law is similarly strict, mandating payment by the end of the next business day for involuntary terminations.

On the flip side, states like Idaho and Kentucky give employers a reasonable grace period to get all the paperwork processed before cutting that last check, even in termination situations. The majority of states require payment by the next regular payday, with a handful specifying a hard deadline of a set number of days.

Payroll compliance with Rippling

Staying on top of varied and ever-changing state payday requirements can be a major challenge, especially for businesses operating across multiple states. That's where a robust payroll solution like Rippling can be so useful.

Rippling's modern payroll system is designed to automate many aspects of payroll processing and tax management. It automatically calculates, withholds, and files payroll taxes, taking into account federal, state, and local regulations.  

Some key Rippling features that can help with final paycheck compliance:

• Real-time calculations based on termination date and reason

• Automatic prorating of salary and vacation payouts

• Support for off-cycle and same-day payments

• State-specific tax filings and compliance updates

• Detailed pay stubs and electronic access for employees

By leveraging a payroll platform built for the complexities of modern, multi-state workforces, HR teams can save countless hours and headaches when it comes to delivering accurate, timely final paychecks.

Frequently asked questions

Can an employer place conditions on final paychecks?

In most cases, no. Final paychecks must be provided according to state law, regardless of whether the employee has returned company property, signed exit paperwork, etc.

What is the penalty for final pay violations in California?

California final paycheck law has some of the strictest payday requirements and steepest penalties. If an employer willfully fails to pay final wages on time, they may owe waiting time penalties equal to the employee's daily wage for each day the payment is late, up to 30 days.

What can be deducted from a final paycheck?

Generally, employers can make deductions from final paychecks for things like taxes, benefit premium payments, and garnishments as they normally would. Some states also allow deductions for unreturned company property with the employee's consent. However, deductions cannot take the employee's pay below minimum wage.

What is termination pay? 

Termination pay refers to the final compensation an employee receives when their employment ends. It typically includes the last paycheck for work performed, plus any additional payments required by law or company policy, such as accrued vacation time, bonuses, or severance pay. The specific components and timing of termination pay can vary based on state laws and company policies.