Terminating an employee is never fun. No one likes to do it. Yet, for any number of reasons, there are times when it is necessary end the employment relationship. Employers need to be careful that they don’t set traps for themselves in dealing with final paychecks. This article will explain some important rules on this topic.
The first key issue is whether the employee has been terminated or has simply resigned. In the case of a termination, or lay-off with no specific return date within the normal pay period, all wages and accrued vacation earned but unpaid are due and payable immediately (see Labor Code section 201). An employer may not ask or require the employee to wait until the next regular payday for the final wages. Moreover, it is illegal to withhold a paycheck for any reason, including inducing a former employee to return tools or uniforms, pay back money that might be owed to the employer, or turn in expense reimbursement forms. The key word in dealing with terminations and final paychecks is that they must be given to the employee immediately.
The standard is different for resignations. If an employee voluntarily quits and gives more than 72 hours notice, all wages and accrued vacation are due and payable on the last day of work. Yet if the employee quits without giving 72 hours notice, all wages and accrued vacation are due and payable not later than 72 hours after notice is given. In these situations, the employee is entitled to receive his or her final wages by mail if he or she so requests and provides the employer with a mailing address. The date of mailing is considered the date of payment for purposes of the 72 hour requirement.
As for the place of final payment, quitting employees are normally required to return to the place of employment to pick up their final check. Again, employers are not required to mail the final paycheck unless the employee requests payment by mail and provides an address. Unless an employee specifically requests that their final paycheck be mailed, the safer practice is to simply hold the paycheck until the employee picks it up.
