Overview: State laws and regulations govern when employers must provide terminated employees with their final pay. 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 pay 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 include the Nevada paid leave law, effective January 1, 2020.
Colorado employers seeking to indicate that Colorado employees will receive pay for vacation upon termination of employment should consider including this model policy statement in their handbook.
This How To maps out the steps an employer should follow in order to properly pay an employee who has separated, or has been involuntary terminated, from employment.
Use this 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.
HR guidance on state laws on the timing of final pay for terminated employees.