So many things run through your mind as an employer when an employee is leaving the company, no matter the reason. Final pay is one area that can be confusing and lead to unintentionally breaking the law. There are two main factors that help determine when a final paycheck must be provided to an employee.
- Whether the separation is voluntary or involuntary. Voluntary separation occurs when an employee chooses to end employment with his or her employer. Terms like resignation or quit are usually used for voluntary separation. Involuntary separation occurs when an employer chooses to end employment with an employee for any reason. Terms like lay off, termination, or fire are often used to describe an involuntary termination. The reason for separation often helps determine when final pay must be received.
- The state where the employee works. Each state has its own final pay rules. Many have different rules depending on the reason for termination (see above). For example, in the state of Utah, an employee who is terminated must be paid within 24 hours. This means that the employee must either have a live check in hand or money sent via direct deposit to their bank account within 24 hours. If an employee voluntarily resigns or quits, the employee must be paid on their next regular pay date. We have a handy resource available to help you determine the Final Pay Laws By State.
Some states have a very quick turnaround for final pay, so understanding the law and planning appropriately is important, especially for predictable separations. If you are a client of Helpside, and have questions about final pay for your employees, we have experts ready to help! Your Payroll Specialist and member of our People Strategy team can help you remain in compliance.