This is an ongoing series looking at the nine California Labor Rules to Ignore at Your Own Peril. Today we’ll discuss Paying Final Wages.
When an employee leaves the company, whether it’s voluntary or not, they must be paid in full on their final day. Direct deposit doesn’t count — they must be given their pay in person. This is a non-negotiable rule in California that cannot be waived by the employee.
Sudden terminations, then, can be difficult, because all the calculations for payroll must be performed, and a paycheck with a statement of earnings and deductions must be produced. Failing this, the employer’s only other legal recourse is to place the employee on paid administrative leave until that paycheck can be produced.
If you’re aware of these strict requirements, your payroll service may be able to assist you in cutting a manual check. The biggest problem with this is extra payroll service fees; nothing ever seems to be included with the base per-employee, per-check price. It’s also important to remember that the final check won’t be reflected until the next payroll batch process your server’s mainframe runs; it’s not reflected in real time.
The only exception to the final paycheck rule is if the employee gives less than 72 hours notice that they are resigning; in that case, the deadline is three days past when that notice was given. Other than that, the final check must be presented upon termination, even if the employee agrees in writing to another method, such as direct deposit.
Cutting the final check is a much smoother process with the flexibility of an in-house payroll system. Since you already control your payday, cutting an additional check is a task which takes little time and no extra cost — other than the price of a sheet of check stock, of course. It’s reflected immediately in the system and keeps you well within the law.
To find out how your company can cut all of its paychecks faster, reducing administrative costs and lost interest income, contact us today.