PAYDAY Workforce Solutions Blog

Tips for Final Paychecks

On Jul 1, 2014

Employers must pay attention to labor law about how final wages are paid out. In California, wages must be paid within specified time periods to avoid non-compliance issues and the appearance of wage theft. The Labor Code Sections 201 and 227.3 require employers to pay final wages including vacation pay to discharged employees immediately upon termination.

The California Labor Code specifies that this final payment of wages must be made at the place of termination, terminating direct deposit arrangements unless the employee authorizes the final payment to be by existing direct deposit arrangement. Labor law specifies that final payment may not be mailed unless requested by the employee.

When Employees Can’t Be Found

If an employer can’t contact or locate an employee to give them the final paycheck per the Labor Code, wages must still be assigned. Employers must try to contact terminated employees to give them the final pay. If they are unable to get a response, employers can send the final paycheck to the nearest office of the Labor Commissioner and explain their efforts to contact the employee.

Document efforts

Employers should document each attempt to contact the employee—the phone numbers called, whether a voice mail message was left or if they spoke to someone, with whom they talked, time and date, etc. If employers send emails or letters to try to contact employees about final pay, they should maintain copies of all communication to demonstrate the attempts that were made to contact the former employee.

If there is no response to attempts at contact and the final paycheck is sent to the Labor Commissioner’s office, that office will make further efforts to locate the employee to make payment of the wages. If those efforts are unsuccessful, the checks will be deposited into the State of California Unclaimed Wages Fund.

Penalties for Noncompliance

Employers who fail to pay final wages at the time of termination can be assessed a waiting time penalty, which is the amount of the employee’s daily pay for each day the wages are unpaid, up to a maximum of 30 calendar days. Employers should maintain a copy of final paychecks and correspondence sent to the Labor Commissioner’s office in the employee’s payroll file for at least four years to prove compliance with labor law about final paychecks when employees can't be located.

Contact PAYDAY for more assistance on tips about paychecks.

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