Payment of wages to departing workers is generally covered by state law. The laws of most states require prompt payment of accrued wages following termination of employment. However, the rules vary from state to state, and different standards may apply depending upon whether the termination is voluntary or involuntary.

Typically, employers can pay resigning workers on the next regular payday. The same is true for employees who walk out in a labor dispute. Some states instruct employers to issue final paychecks within a specific number of days or hours, which may expire before the next regular payday. For example, California employees who leave voluntarily must be paid within 72 hours.

Tighter schedules may apply to involuntary separations. California requires immediate payment upon a discharge for cause. Minnesota is another state with this rule.

Failure to follow the designated time constraints may lead to additional wage liability or civil penalties. One type of provision extends wage liability until the time of late payment. Double payment also may be required.

Tardy payment may also violate federal and state laws covering minimum wages and overtime pay. The federal Fair Labor Standards Act requires prompt payment—usually no later than the next regular pay period.

Employers should have a policy and procedures in place for issuance of paychecks in termination situations. Check that policy against state law and ensure that supervisors who have firing authority do their paperwork in timely fashion.

Source: CCH Wage & Hour Compliance Guide.