Pay an Employee's Final Wages
When to Use This Workflow
Use the Pay an Employee's Final Wages workflow to determine how to properly pay final wages to an employee whose employment has ended, either in accordance with or in the absence of a state final pay law. An employer that does not pay final wages properly and on time may be subject to substantial penalties and/or litigation.
Most states have a final pay law but a few do not. State laws on final pay usually dictate when, what and how to pay based on the nature of the employee's departure. Exceptions to these laws may apply to certain types of employees and situations. In addition, any applicable employer policies, employment contracts and/or collective bargaining agreements may further impact these variables. In states where there is no law addressing final pay, an employer may still be bound by the terms of an applicable policy, contract and/or agreement.
This workflow takes an employer through the steps of making an employee's final wage payment, from identifying the type of separation to calculating and executing the payment.
- Is there a state law that dictates when to make the final payment?
- Does state law dictate what to include in the final payment?
- Reconcile the terms of any applicable employer policy, employment contract and/or collective bargaining agreement.
- Calculate the gross final pay.
- Calculate all taxes required to be withheld from the final payment.
- Calculate any other legally required and/or permitted deductions.
- Choose the method of final payment.