Final Pay

Contrary to popular belief, employers are NOT required by Federal law to give former employees their last paycheck immediately.   However, states may regulate the timing of final pay so employers are always cautioned to check their state regulations.

In Texas, the timing of final pay is regulated by the Texas Payday Law, Section 61.014.  Under the Texas Payday Law, the timing of final pay is based upon the circumstances of the employees termination.   Did the employee resign or was the employee terminated?

In those situations where an employee voluntarily resigns, quits, retired or other wise leaves employment voluntarily, the final pay is due on the next regularly-scheduled payday following the effective date of resignation.  However, if the employee is laid off, fired, or in any way involuntarily separated from employment, the final pay is due within six (6) calendar days of the discharge.

 

States differ with respect to the handling of final pay.  For instance, in California if an employee is fired, s/he must receive their check immediately.  If the employee quits, s/he must receive their final check within 72 hours.  For Connecticut, final pay is due on the next business day if the employee is fired.

 

One of the most frequent questions I am asked pertains to withholding funds from an employee due to loans, cost of company equipment, etc.  As an employer, legally you can NOT make such a deduction unless you have the employees written authorization prior to making such a deduction.  Additionally:

• Depending on the state where you and/or your employee reside, there may be additional restrictions.
• Even where deductions are authorized, the employer may not reduce the worker's final check below the applicable minimum age.

In closing, carefully check your state laws to ensure that you handle an employee's final pay properly.