Issue: Depending on which state you operate in, you have from one day to two weeks to issue final paychecks to employees who leave.
Risk: Penalties can be steep: Some states keep the pay clock ticking until you issue the final paycheck.
Action: Investigate your state's final-paycheck restrictions.
Pop quiz: How soon after an employee quits or is fired must you deliver his final paycheck?
If you answered, "Huh?" or the equivalent, join the club: Most HR managers don't even know that such rules exist. But they do: Every state sets restrictions on how soon departing employees must be paid, whether they've resigned, or been laid off or fired.
More than half the states require employers to cough up workers' final paychecks by "the next regular payday." Others require even quicker turnaround. California employers, for example, must give final paychecks within 72 hours to workers who resign and immediately to workers who are fired. Because many states impose administrative penalties and attorney fee awards, a smallmistake can cost you.
Another tip: Don't hold employees' final paychecks as a way to pressure them to return uniforms or other property. While some states let you refuse to pay final wages when the employee owes the company money due to gross negligence, that's often difficult and expensive to prove.
Recent case: An Oregon fast-food worker quit on Jan. 11 and stopped in for her last check three days later. It wasn't ready, so the worker asked to be called when it was. The check arrived at the restaurant Jan. 24, but she didn't get it until Feb. 8. The worker successfully sued the restaurant, citing Oregon law, which says that when workers quit without giving at least 48 hours' notice, their paychecks are due within five days or the next payday, whichever comes first. (Wales v. Walt Stallcup Enterprises, No. 97-01829CV: CA A102680, Ore. Ct. of App.)
Remember: The burden is on you to pay within the limit, not on the employee to ask. In this case, the restaurant had to pay a big penalty plus attorney fees because the court considered its failure "willful."
Free Report: 50 state laws on paying terminated staff
Each state sets its own rules on how quickly employees must receive final paychecks after resigning or being fired. What's your state's law? To find out, obtain a copy of our free report, Paying Terminated Employees: 50 State Laws, at www.hrspecialist.net/extra.
- How to Fire an Employee the Legal Way: 6 Termination Guidelines
- Your best protection against bias lawsuits: Let he who hired be the one who fires
- Is your HR department effective? 5 questions to find out
- Poll: Women qualified for top jobs but are held back
- Can job description call for 'high energy' worker?