California labor laws are designed to offer the local workforce the best possible experience, even if they are laid off or otherwise involuntarily separated from their positions. While these rules may seem like “common sense” measures, one should keep in mind that most states do not have statutes on the books covering these payments.
Take a look at what the California Final Paycheck laws are and how best to abide by them as a business owner or manager. In like manner, employees should read further to better understand their rights.
The Basics of the Final Paycheck Law
Final paychecks must be disbursed based on how the employee leaves the company. Because there are different circumstances surrounding every job loss, this list helps break down the timeline:
- Discharged employees (fired, resigned, laid off, etc) must receive their wages on the date of termination
- Employees who resign (quit) with less than 72 hours’ notice must be paid within 72 hours of the date of their resignation
- Employees who give more than 72 hours’ notice of their resignation must be paid on their last day of work
Keeping this timeline in mind is the best way to manage any company. All supervisors and managers must be aware of this timeline so that they can report all job losses, firings, or resignations to accounting immediately. In fact, this timeline is something that should be posted in every management office for the sake of compliance.
How Employees Might Resign
In the digital age, it is perfectly reasonable to expect that employees may resign via email. The California courts have not specifically clarified how this starts “the clock” on payment, but recent decisions have covered the fact that the sending of an email does not amount to a resignation. There is a digital record of when the email was read by the recipient, and it is wise to move quickly to avoid any legal proceedings.
Therefore, it is smart to start the “internal clock” in your office with the receipt of these emails and an immediate forwarding to the accounting department. (This is why it is important to check one’s junk mail every day for fear of missing messages such as these.)
How Are Final Paychecks to be Sent?
Generally, final paychecks can be sent via the traditional method used by the company, which is often a third-party company that sends direct deposits. It is easy to record when the payment was rendered, and the employee should receive those funds in short order. However, this is only allowed if the employee authorizes a final direct deposit.
If a physical check is written, it must be mailed by the deadline or hand-delivered to the employee within the offices of the business. Employers are wise to clearly post how all final payments will be made and not deviate from that practice unless a hardship is experienced by the employee.
How Much is the Final Paycheck?
Final paychecks should include all earned wages that have yet to be paid. If employees are vested in any way, their vacation time or other vested options must be included in the final paycheck and clearly notated. Unpaid sick time need not be paid in this check, but employers may choose to add accrued sick days.
Finally, these paychecks cannot include deductions for unreturned company property, which may be difficult to manage for the employee. If there are other costs the employer believes it should recover, it cannot deduct them from the final paycheck. However, employers are free to seek other forms of legal recourse to recover these funds.
Stay in Compliance with the California Final Paycheck Law
Remember, any business found to have not paid final wages properly could be liable for up to 30 days of pay for that employee. If you have any questions about how to properly manage these final payments or if you have not been paid by a previous employer, reach out today for a consultation.