Tax & Accounting Blog

Final Pay Information for Terminated Employees

Accounting Firms, CS Professional Suite Accounting & Auditing Solutions, CS Professional Suite Payroll Solutions February 2, 2017

“When do I need to give an employee their final pay?”

This question comes up frequently — even daily for some companies. Let’s say you’ve made the difficult decision to terminate an employee. The rules and timing of their final paycheck is determined by the state in which the employee works.

For some states the final payment can be delivered on the next regular scheduled payday — however, certain states require the employer to accelerate the payout date. Some states even mandate that the employer must pay the terminated employee on the last day of work.

The following states require immediate pay for terminated employees:

  • California
  • Colorado
  • Illinois
  • Massachusetts
  • Missouri
  • Montana
  • Nevada

These states require final pay within one day of termination:

  • Connecticut
  • Hawaii
  • Minnesota (on demand)
  • Oregon
  • Rhode Island (certain circumstances)
  • Utah
  • Washington, D.C.
  • Wisconsin (certain circumstances)

Finally, a couple of states require final pay within 72 hours of termination:

  • New Hampshire
  • Vermont

Several states have industry-specific rules and other acceleration times — you should check with your state’s Department of Labor for specific details. Note: if the state has no provision, you can pay on the next regular pay date.

Where some companies also encounter challenges is with voluntary terminations, when an employee quits. Some states require accelerated payouts, as well.

The following states have voluntary resignation-specific provisions:

  • Alaska
  • California (72 hour rule)
  • Idaho
  • Illinois
  • Kentucky
  • Louisiana
  • Maine
  • Michigan
  • Minnesota
  • Montana
  • Nebraska
  • Nevada
  • New Hampshire
  • Oregon
  • South Carolina
  • Tennessee
  • Washington, D.C.
  • Wisconsin (certain cases)

Finally, let’s talk about vacation pay. It’s a common source of confusion about whether vacation accrual must be paid at termination. For example, California requires that all accruals be paid out at termination.

The following states also have some vacation accrual payouts:

  • Alaska (company policy)
  • Arizona (company policy)
  • Arkansas (company policy)
  • California
  • Colorado (company policy)
  • Connecticut (company policy)
  • Delaware (company policy)
  • Hawaii (company policy)
  • Idaho (company policy)
  • Illinois
  • Iowa (company policy)
  • Kansas (company policy)
  • Kentucky (company policy)
  • Louisiana (company policy)
  • Maine (company policy)
  • Maryland (see state specific instructions)
  • Massachusetts (oral or written agreement)
  • Michigan (company policy)
  • Minnesota (company policy)
  • Montana (company policy)
  • Nebraska (company policy)
  • New Hampshire (company policy)
  • New Jersey (company policy)
  • New Mexico (company policy)
  • New York (see state rules)
  • North Carolina (company policy)
  • North Dakota
  • Ohio
  • Oklahoma
  • Oregon (company policy)
  • Rhode Island (written or oral)
  • South Carolina (company policy)
  • Tennessee (company policy)
  • Texas (company policy)
  • Utah (company policy)
  • Vermont (company policy)
  • West Virginia (company policy)
  • Wisconsin (company policy)
  • Wyoming

Our features with myPay Solutions Direct and Accounting CS Client Access help employers to quickly respond and produce a paycheck for those states with strict requirements. Remember to also refer to your state’s Department of Labor to stay up to date and learn about any additional details.

If you want to learn more about payroll compliance, I’ll be speaking at a free payroll webcast this month. See more details and register here. We hope to see you there!