When an employee's final paycheck must be paid depends upon whether the employee was terminated or they quit, and if they quit, when they provided notice of their intention. Failure to pay an employee's final wages when due can subject the employer to various penalties.
When the Employer Terminates the Employee
If the employment relationship ends because the employer terminates the employee, lays them off, or otherwise lets them go, the employee's final paycheck must be provided to them on their last day of work. (Labor Code § 201.) The employer is subject to various penalties if it waits until the next regularly scheduled payday to pay the employee their final wages. (Labor Code §§ 203, 210.)
When the Employee Quits
If the employee voluntarily quits, and provides at least 72 hours notice, their final paycheck is due on their last day of work. If the employee voluntarily quits and provides less than 72 hours notice, the final paycheck is due not later than 72 hours after notice is provided. Additionally, the employee can request that their final paycheck be mailed to them, and the mailing must occur within the 72 hour period. (Labor Code § 202.)
If the employee quits and does not give instructions about where to send their final pay check, then payment is made at their place of work. In other words, the employer needs to have the check ready for the employee to pick up. If the employee does not pick up their check it does not need to be mailed to them. (If the check is not picked up for 3 years escheat rules may apply and the employer may need to notify the State Controller's Office it has money owed to the employee).
What Must be Paid
All earned wages and accrued but unpaid vacation time must be paid to the employee. Vacation pay issues are discussed in the Vacation Pay area. Expenses, however, do not need to be reimbursed until the normal time for reimbursement occurs.
Failing to pay wages when due can require the employer to continue paying the employee wages on a day-to-day basis, for up to 30 days, until the final paycheck is paid. These statutory penalties and attorneys' fees if a court action is filed may be awarded. (Labor Code §§ 203, 218.5.)
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