Department of Labor

Final Paycheck Laws: When Employers Must Pay Departing Employees

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The end of an employment relationship involves several administrative steps, with the final paycheck being a crucial element. Understanding when and how this final payment should be made is essential for both employees and employers.

While federal law sets a basic standard, state laws often dictate more specific and frequently stricter requirements regarding the timing and content of final wages. This guide breaks down the key rules surrounding final paychecks in the United States.

Federal Law Baseline

The primary federal law governing wages is the Fair Labor Standards Act (FLSA). However, the FLSA itself does not mandate when a final paycheck must be issued to a departing employee. The federal requirement is simply that employees receive their wages for the last pay period worked on or before the regular payday for that period. This means federal law doesn’t compel an employer to issue a final check immediately upon termination or resignation. The FLSA primarily focuses on ensuring minimum wage and overtime pay standards are met for all hours worked.

State Laws Take Precedence

While the FLSA provides a floor, it does not prevent states from enacting laws that offer greater protections to employees regarding final pay. Consequently, most states have established their own specific deadlines for issuing final paychecks, and these state laws often supersede the more general federal guideline.

State regulations frequently depend on the circumstances of the separation – specifically, whether the employee resigned voluntarily or was terminated involuntarily (fired or laid off). In many cases, states require faster payment when an employer terminates the employment relationship compared to when an employee quits.

Employers must comply with the applicable state law, as these regulations carry legal weight and failure to adhere can lead to penalties. A few states, however, do not have specific final paycheck timing laws and default to the federal standard of the next regular payday.

When Final Paychecks Are Due: State-by-State Rules

The deadline for receiving a final paycheck varies significantly across the United States. The most common determining factor is whether the employee quit or was discharged/laid off.

Common Scenarios

Termination (Involuntary)

Many states require payment much sooner when an employee is fired or laid off, sometimes immediately or within a few days. For example:

  • California generally requires immediate payment upon discharge
  • Texas requires payment within six calendar days
  • Montana requires payment immediately (within four hours or the end of the business day) unless a written policy states otherwise, extending it no later than the next payday or 15 days
  • Missouri mandates immediate payment upon discharge

Resignation (Voluntary)

When an employee quits, states often allow employers until the next scheduled payday or a specified timeframe to issue the final check. For example:

  • California allows 72 hours if no notice is given
  • Some states, like California and Oregon, have provisions requiring immediate payment if the employee provides sufficient advance notice (e.g., 72 hours in CA, 48 hours in OR)
  • Montana requires payment by the next scheduled payday or 15 days, whichever is first, when an employee quits
  • Texas requires payment on the next regularly scheduled payday after the resignation date

“Next Payday” States

Some states simply require the final paycheck by the next regular payday, regardless of the reason for separation. Examples include Illinois, New Jersey, New York, North Carolina, Pennsylvania, and others.

“Whichever is Sooner/Later” States

Other states use a model comparing the next payday to a set number of days:

  • Idaho: next payday or 10 days, whichever is first
  • Tennessee: next payday or 21 days, whichever is later

No Specific State Law

A few states, like Florida, Georgia, Alabama, and Mississippi, have no specific state law governing the timing of the final paycheck, meaning the federal standard (next regular payday) applies.

State-Specific Examples

Below is a summary of final paycheck timing requirements for several states. Note: Laws can change; always verify with the official state resource.

Arizona

Arkansas

  • Termination: Next payday (Penalty: double wages if not paid within 7 days of payday)
  • Resignation: Next payday
  • Resource: Arkansas Division of Labor

California

  • Termination: Immediately (some industry exceptions exist, e.g., seasonal canning/drying, motion pictures, oil drilling)
  • Resignation: Immediately if 72+ hours notice given; within 72 hours if less than 72 hours notice given. Payment can be mailed if requested by employee quitting without 72 hours notice. Final pay location is typically the place of discharge or county office.
  • Resource: California Department of Industrial Relations, Labor Commissioner’s Office

Colorado

District of Columbia

Hawaii

Idaho

  • Termination/Resignation: Next payday or within 10 working days, whichever is sooner. If employee requests earlier payment in writing, due within 48 hours (excluding weekends/holidays)
  • Resource: Idaho Department of Labor

Illinois

Maryland

Massachusetts

Minnesota

  • Termination: Within 24 hours of employee’s written demand
  • Resignation: Next payday. If payday is within 5 days of quitting, employer has until the following payday, but no later than 20 days after the last day worked
  • Resource: Minnesota Department of Labor and Industry

Missouri

Montana

  • Termination: Immediately (within 4 hours or end of business day), unless written policy extends to next payday or 15 days, whichever is earlier
  • Resignation: Next payday or within 15 days, whichever is first
  • Resource: Montana Department of Labor & Industry, Employment Relations Division

Nevada

New Hampshire

  • Termination: Within 72 hours (layoffs may differ)
  • Resignation: Next payday, or within 72 hours if employee gave at least one pay period’s notice
  • Resource: New Hampshire Department of Labor

New Mexico

  • Termination: Within 5 days (fixed wages) or 10 days (variable wages like commissions)
  • Resignation: Next payday
  • Resource: New Mexico Department of Workforce Solutions, Labor Relations Division

Oregon

  • Termination: By the end of the next business day
  • Resignation: Immediately if 48+ hours notice given (excluding weekends/holidays); otherwise, within 5 business days or next payday, whichever is first
  • Resource: Oregon Bureau of Labor & Industries

South Carolina

South Dakota

  • Termination/Resignation: Next scheduled payday. Employer may withhold pay until company property is returned (Note: This is an exception; most states prohibit withholding pay for property)
  • Resource: South Dakota Department of Labor & Regulation

Tennessee

Texas

  • Termination: Within 6 calendar days of discharge
  • Resignation: Next regularly scheduled payday after resignation date
  • Resource: Texas Workforce Commission

Utah

For states not listed or for the most current information, consult the U.S. Department of Labor’s list of State Labor Offices.

What’s Included in a Final Paycheck

A final paycheck should encompass all compensation earned by the employee up to their last day of work. This typically includes:

Earned Wages

All regular wages for hours worked during the final pay period, including any overtime earned according to federal and state law. Federal law generally requires overtime pay at 1.5 times the regular rate for non-exempt employees working over 40 hours in a workweek.

Accrued, Unused Vacation/Paid Time Off (PTO)

This is heavily dependent on state law and company policy.

  • Some states, like California, consider earned vacation time as wages that must be paid out upon separation
  • Other states may not require payout unless the employer has a policy or agreement stating they will do so
  • Some states allow “use-it-or-lose-it” policies if clearly communicated, while others prohibit them
  • Payout requirements might differ for vacation time versus sick leave, unless bundled into a general PTO policy

Check your specific state’s rules and the employer’s written policies.

Commissions and Bonuses

Earned commissions and bonuses must generally be included. However, the exact timing for paying these components might differ from regular wages, especially if calculations depend on factors finalized after the employee’s departure.

State laws or the specific terms of the commission/bonus agreement often dictate when these payments are due. A clear, written agreement is crucial to define how commissions/bonuses are handled upon separation.

Other Compensation

Depending on the employment agreement or company policy, other earned compensation like severance pay (though not legally required by FLSA or most states unless promised) or other fringe benefits might be included or paid separately.

Important Note on Deductions and Withholding

Employers generally cannot withhold a final paycheck because an employee hasn’t returned company property (like keys, uniforms, or computers) or signed paperwork.

Deductions from the final paycheck are strictly regulated. While deductions required by law (taxes, court-ordered garnishments) are permissible, deductions for things like unreturned equipment are complex.

Federal law prohibits such deductions from exempt employees’ final pay. For non-exempt employees, federal law may allow deductions for property if it doesn’t reduce pay below minimum wage or cut into overtime, and if state law permits it. Many states prohibit or restrict these deductions.

An employer cannot condition the receipt of a final paycheck on the employee signing a release of claims.

Penalties for Late Payment

Employers who fail to issue final paychecks within the timeframe mandated by state law can face significant consequences. These penalties vary by state but are designed to incentivize timely payment and compensate employees for the delay.

Waiting Time Penalties

Some states impose penalties calculated based on the employee’s daily wage for each day the final paycheck is late, up to a maximum number of days.

  • California: Employers face a “waiting time penalty” equal to the employee’s average daily rate of pay for each day wages remain unpaid, up to a maximum of 30 calendar days. This penalty applies if the failure to pay is “willful.” A “good faith dispute” over the amount owed can prevent the penalty.
  • Minnesota: Penalties can accrue at the employee’s average daily earnings rate for each day the payment is late, up to 15 days.

Fixed Penalties or Multiplied Wages

Other states may impose fixed fines or require the employer to pay double or triple the unpaid wages.

  • Arkansas: If final pay isn’t issued within 7 days of the next scheduled payday, the employer owes double the wages due.
  • Missouri: If an employer doesn’t pay within 7 days of receiving a certified mail request for final wages, they can be liable for additional wages for up to 60 days.
  • Oregon: Failure to pay on time can result in penalty wages equal to 8 hours of pay at the regular rate for each day the payment is late (up to 30 days). Employers may limit this penalty under certain conditions by paying within 12 days of written notice from the employee. Willful failure can also lead to a $1,000 civil penalty payable to the state, plus costs and attorney fees.

Interest and Attorney Fees

In addition to penalties, employers might be liable for interest on the unpaid wages and potentially the employee’s attorney fees if legal action is taken.

These potential penalties underscore the importance for employers to understand and strictly adhere to their state’s final paycheck laws.

How to File a Wage Claim for Late Final Paychecks

If an employee does not receive their final paycheck by the legally required deadline, there are steps they can take to recover their earned wages.

Contact the Employer

The first step is usually to contact the former employer directly to inquire about the delay and request payment. Sometimes, delays are due to administrative errors that can be quickly resolved.

In some states, like Maryland and Missouri, formally demanding payment (preferably in writing, like certified mail) is a prerequisite or recommended step before filing an official claim. Keep records of these communications.

Identify the Correct Agency

If contacting the employer doesn’t resolve the issue, the next step is typically to file a wage claim with the appropriate government agency.

Federal Claims (U.S. Department of Labor)

The U.S. DOL’s Wage and Hour Division (WHD) handles claims related to federal laws like the FLSA, primarily concerning minimum wage and overtime violations. While the FLSA doesn’t set strict final pay timing deadlines beyond the next payday, the WHD can assist if that payday has passed without payment. They also handle claims against public/government employers.

You can find information on filing a complaint online or by calling 1-866-4US-WAGE (1-866-487-9243). The WHD also has a system called “Workers Owed Wages” (WOW) to search for back wages the agency may have already recovered from employers.

State Claims (State Labor Agencies)

Because most final paycheck timing and content rules (like vacation payout) are governed by state law, the state’s labor department or equivalent agency is usually the primary resource for these specific claims. These agencies investigate violations of state wage payment laws.

File the Claim

Employees will need to submit a formal complaint form to the relevant state agency. This typically requires providing detailed information, including:

  • Employee’s name and contact information
  • Employer’s name, address, and contact information
  • Employment dates (start and end)
  • Rate of pay
  • Job duties
  • Amount of wages believed to be owed
  • Pay periods involved
  • Date payment was due
  • Any supporting documentation (pay stubs, time records, employment agreement, written demand for payment)

State Agency Links

Be Aware of Deadlines

There are strict time limits for filing wage claims. Missing the deadline can mean losing the right to recover unpaid wages.

  • Federal FLSA: Generally 2 years from the date wages were due (3 years for willful violations)
  • Texas: 180 days from the date wages were due
  • Illinois: 1 year from the date wages were due for claims filed with the state agency
  • Maryland: Claim should be filed with the state agency within 2 years to ensure time for investigation, although the statute of limitations for filing in court is 3 years

Always check the specific deadline for the relevant federal or state law. Act promptly.

Agency Investigation

Once a claim is filed, the agency will typically notify the employer and investigate the complaint. This may involve requesting records and interviewing parties. If the agency finds wages are owed, it will seek payment from the employer.

Other Options

Employees may also have the option to pursue their unpaid wages by filing a lawsuit directly in court (e.g., small claims court for smaller amounts or a higher civil court), sometimes without needing to file with the government agency first.

Understanding these rights and procedures empowers employees to take action if their final paycheck is not paid correctly and on time.

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