Overview: State laws and regulations govern when employers must provide terminated employees with their final paycheck. Employers should stay abreast of the termination pay laws in the states where they pay employees because there are serious civil and criminal penalties for failure to comply.
Most state laws require final paychecks to be issued at the time of termination, within a certain number of days after termination, or at least by the next regular payday. In many states the timing rules differ for voluntary terminations and involuntary terminations. Additional special rules may apply to employers in certain industries and for temporary layoffs, lockouts and strikes.
Some state laws also have specific provisions regarding payment of unused accrued vacation time on termination. In other states, however, it depends on the terms of the particular employer's policy, handbook, employment contract or collective bargaining agreement, if any.
Author: Rena Pirsos, JD, Legal Editor
Updated to reflect the reduced supplemental withholding rates under the tax reform law enacted on December 22, 2017, effective January 1, 2018.
Updated to include an increase in the maximum wages payable to relatives of a deceased employee, effective December 29, 2017.
Updated to include pay frequency, pay statement and termination pay requirements of the Washington Paid Sick and Safe Leave Law, effective January 1, 2018, and the forthcoming state Small Business Retirement Marketplace.
Updated to include pay frequency requirements for fast food employees under the New York City Fair Work Practices ordinances, effective November 26, 2017, and the safe time amendments to the New York City Earned Sick Time Act.
Updated to include amendments regarding payout of accrued vacation pay in Maine, effective November 1, 2017.
Updated to include information regarding the forthcoming Small Business Retirement Marketplace.
Updated to include a forthcoming law regarding payout of accrued paid sick leave on termination.
HR guidance on state laws on the timing of final paychecks for terminating employees.