This blog was written by Mehana Currie, VP of Payroll at Helpside.

Whether an employee’s termination is voluntary or involuntary, it’s important for employers to understand their responsibilities of when and how to properly pay an employee.  Having a clear understanding of your state laws will help keep you and your business compliant and mitigate the risk of financial penalties.

Voluntary vs. Involuntary

A voluntary termination is when an employee initiates a decision to leave the company where they are currently employed.  An involuntary termination is when the employer initiates a decision to dismiss an employee from employment of the company.  The difference between the two is determined in who initiates the end of the employment relationship.

Managing final pay after termination

There are a few things to consider when dealing with an employee’s final pay:

  1. The state an employee works in
  2. The effective date of the termination
  3. Whether the termination is voluntary or involuntary
  4. The date the employee will receive their final pay in hand based on payroll processing timelines

Utah termination pay laws

In the state of Utah, if an employee is involuntarily terminated, they must be paid within 24 hours of the termination date. If an employee is voluntarily terminated, then they must be paid by the next regular pay date.

An employer must also pay an employee for accrued vacation upon separation from employment if its policy or handbook provides for such payment.

Arizona termination pay laws

In the state of Arizona, employers must pay their involuntarily terminated employees within the earlier of either 7 working days or the end of the next regular pay period. There is no provision for voluntary terminated employees.

Employers are not required to provide employees with vacation benefits. If an employer chooses to provide such benefits, it must comply with the terms of its established policy or handbook.

Wyoming termination pay laws

In Wyoming, whether an employee is involuntary or voluntarily terminated, they must be paid by the next regularly scheduled pay date.

The value of unpaid vacation time accrued as of the date of termination does not have to be paid to the employee if the employer’s written policies specify that accrued vacation is forfeited upon termination of employment, and the written policies are acknowledged in writing by the employee.

California termination laws

In the state of California, if an employee is involuntarily terminated, the employer has a legal obligation to provide the employee’s final paycheck immediately upon termination. In California, the employer is obligated to pay the employee the equivalent of a day’s wages for every day after termination until final wages are paid (including weekends) if not paid on the last day worked.

Employees who resign their employment must be paid within 72 hours of resignation. However, if the employee provides at least 72 hours’ notice of their resignation, they must be paid at separation. Employers who fail to pay wages may be required to pay both the unpaid amount plus an additional 30 days’ wages at the employee’s regular pay rate.

While individual state wage payment law websites will provide the most up to date information, we created this handy chart to help employers understand final pay laws in each state.

Download Final Pay By State Chart

How to prepare for an employee termination (for Helpside Clients)

Below are a few key steps to follow when offboarding an employee to ensure delivery of their final pay in a timely manner.

  1. Reach out to a member of our Human Resources team (humanresources@helpside.com) prior to having the termination conversation. Communicating with Helpside prior to a termination discussion allows the HR team to provide guidance on best practices and timelines.
  2. Identify the employee’s work state.
  3. Determine if the employee’s termination is voluntary or involuntary.
  4. Review the final pay by state law for the state the employee is employed in.
  5. Submit an Offboarding Request by 9:00am, 48-business hours prior to the employee’s term effective date online via Helpside Tools.
    a. This will allow time to process the final pay and make it available for you to hand the employee their final pay during the exit interview or allow time for a direct deposit to be posted into the employee’s account in a timely manner.
  6. In the Offboarding Request, provide details of the employee’s final pay:
    a. Hourly employee:
    • Hours worked
    • Additional pay
    • PTO payout
  • b. Salary employee:
    • Days worked
    • Additional pay
    • PTO payout

7. In the Offboarding Request, please be sure to provide details as to whom and where the final check should be sent to.

It is important for employers to understand the payment procedures and state laws for involuntary and voluntary termination. If you have questions about employee terminations, contact our HR experts at humanresources@helpside.com or (801) 443-1090.