What you need to pay, and when, when an employee quits or is let go, and how to get the last paycheck right.
The Fair Labor Standards Act requires that employees receive at least minimum wage and any overtime owed for all hours worked, paid on the regular payday for the period. It does not require employers to pay final wages immediately or to pay out unused vacation. In practice, this means state law and your own policies determine most of the final paycheck rules.
To total hours with breaks and overtime, use our time card calculator.
| Situation | Common approaches |
|---|---|
| Employee is terminated | Some states require payment immediately or within a day or a few days; others allow the next regular payday |
| Employee quits with notice | Often the last day of work or the next regular payday, depending on the state |
| Employee quits without notice | Often within a set number of days or by the next regular payday |
| Layoff | Treated like a termination in many states |
California is a well-known strict example: final wages are generally due immediately on termination, on the last day when an employee gives at least 72 hours’ notice of quitting, and within 72 hours when an employee quits without notice, with waiting time penalties for late payment. Other states have their own deadlines. Check the rules in the state where the employee worked.
Deductions from final pay, for example for unreturned equipment, are restricted by federal minimum wage rules and often by state law. Many states require written authorization or prohibit such deductions altogether.
Some states treat earned vacation as wages that must be paid out at separation. Others leave it to the employer’s written policy, which must then be followed. Sick leave is often treated differently from vacation. Make sure your policy is clear and consistent with the law in each state where you operate. See our glossary entries on PTO payout and the PTO accrual policy article.
The most common final pay problem is missing time: the last shift was not approved, a missed punch was never fixed, or the employee left before clocking out. Close these gaps before running the final paycheck. With EZTime, managers can see the employee’s punches up to the last day, fix missed punches with a record of the change, and export approved hours straight away instead of waiting for the regular pay cycle. Our guide on calculating payroll hours covers the basics.
Final pay is only part of the separation. Employees may need information about continuing health coverage, for example under COBRA where it applies, retirement plan balances and any unemployment insurance notices your state requires. Prepare a short exit packet so nothing is forgotten, and make sure the employee knows who to contact with questions about their final paycheck.
States regulate not only when but also how final pay is delivered. Direct deposit is usually allowed if the employee previously authorized it, and some states require that the employee be able to get the full amount without fees. If the employee is no longer on site, some states allow mailing at the employee’s request. Pay cards and other methods have their own rules. Confirm the allowed methods in your state, and keep proof of delivery, such as the deposit confirmation or a signed receipt.
Exempt employees are also owed final pay on the state deadline. For the final week, federal rules generally allow paying only for the days actually worked in the initial or final week of employment, but check how your state treats partial weeks and make sure any bonus or commission plan is followed.
Keep a record of the separation date, the reason, final hours, the final pay calculation and how and when it was delivered. Our employee termination letter template is a starting point for the written notice. Keep these records for the full retention period, along with time and payroll records. If a former employee later questions their final pay, this file lets you answer quickly and with confidence.
No. Under federal law final wages are generally due by the next regular payday. Many states set shorter deadlines.
It depends on state law and your written policy. Some states require payout of earned vacation; others follow the employer’s policy.
Generally no. Final pay deadlines apply regardless, and deductions for equipment are restricted.
In many states, yes. Terminations often require faster payment than resignations.
Yes. Wages for hours worked are owed regardless of how employment ended. Check your state’s deadline for employees who quit without notice.
Correct the record using the best available information, document the change and pay for all hours worked.
Monthly attendance reports in EZTime are signed digitally by employees, and history is kept for up to seven years. Pricing starts from $2 per employee a month, and the smallest accounts pay a $20 monthly minimum.