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How frequently must employees be paid? What’s the rule on final paychecks?

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in Small Business Tax Deduction Strategies

Q. How often do I have to pay my employees? Are there any rules that require payment upon termination within a specific time period?

A.
Ohio has a specific law that details how companies are to pay their employees: O.R.C. 4113.15. Under this statute, businesses have to pay their employees at least two times a month, at least as frequently on the 1st and 15th of each month. Of course, employers can choose to pay more frequently, but any less often would violate the statute.

If wages go unpaid for 30 days past a regularly scheduled payday, or 60 days if no payday applies (such as a vacation or bonus payout), the employer could be held liable for liquidated damages of the greater of 6% of the unpaid wages or $200, provided that there is not a legitimate dispute over the payment of the wages.

The law does specifically speak to the handling of unpaid wages upon termination. One reasonable reading of the statute would make them due on the first regularly scheduled payday following the last day of employment. Another reasonable reading would make them due within 60 days after the last date of employment.

The most prudent practice would be simply to include final paychecks with the next regular payroll run. The employer, however, will not incur any potential liability until 30 days after that next payroll.

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