Get the Final Paycheck Right (or Else)
It’s that time for employee turnover, whether you decided it or not.
Now what do you have to put in their final check? You must include payment for all the hours they worked and non-discretionary bonuses earned, and, except in the one instance provided below, all vacation pay and compensatory time-off. If they earn commissions, those all have to be paid, unless there is a condition (like receipt of a customer’s payment), then you have to pay immediately once that condition has been satisfied.
When is it all due? This is the important part, because if you do not pay up everything when it is time, you are liable for waiting time penalties that could be multiples of what you actually were supposed to pay in the first place. And this all depends on how the employee exited your business.
Fired? If you fired them, then you owe them a check with all of their pay at the time of termination. This includes vacation and compensatory time-off.
They quit? If they quit on the spot, the law is going to give you some time, but not much. 72 hours is all you have to make that check available, which includes getting it in the mail (i.e., postmarked within 72 hours). If they gave notice, you’ve got to have that check ready on their last day. As to vacation and compensatory time, this is the one time that the employee can opt to not have this included their final paycheck, but rather have it placed in their retirement account. The soon-to-be-former employee must make this special request in writing five workdays before their last day.
You laid them off? It happens. Work slows, sometimes predictably like with seasonal food workers food (think canning). Or maybe they were under a contract, like in the movie industry. Well, the timing is a little different for each.
Seasonal folks — this is also an industry the law recognizes. 72 hours is the time you have, same as for the quitin’ folks. Likewise, make the check available or mail it, per their request.
Movie types — short gigs are part of the industry, right? The law knows this, so you’re going to pay them the next payment cycle.
So let’s wrap this up with a little Maier Map.