Navigating employee separations poses challenges for companies, requiring thoughtful attention to legal obligations, effective communication strategies, and the preservation of a respectful and professional atmosphere throughout the transition. A crucial component of this process involves promptly issuing the employee's final paycheck in strict compliance with the California Labor Code.
The Final Paycheck:
When an employee is discharged, all wages, including any earned but unused vacation pay, must be paid at the time of termination (See Labor Code § 201). Notably, there is no legal requirement to pay accrued sick leave upon termination. The final paycheck should be provided at the place of discharge (See Labor Code § 208).
For employees who quit without prior notice, wages must be paid within 72 hours, but if the employee provides at least 72 hours' notice, payment is due at the time of quitting (See Labor Code § 202). Employees who quit without notice can request that their final wage payment be mailed, with the mailing date considered the date of payment.
Direct deposits are terminated immediately upon quitting or discharge unless the employee voluntarily authorized the deposit. Employers must comply with Labor Code Section 213(d) regarding the payment of wages upon termination or quitting.
Penalties for Late Payments:
Employers failing to pay wages within specified time frames may face penalties under Labor Code § 203. The penalty, calculated by multiplying the daily wage rate by 30 days, can be assessed from the due date to a maximum of 30 days. Penalties can be avoided if the employer demonstrates a good-faith dispute existed concerning the wages owed.
Employers with non-negotiated checks for terminated employees can submit them to the nearest office of the Labor Commissioner. If efforts to contact the employee fail, the checks may be deposited into the State of California Unclaimed Wages Fund.
Withholding Part of an Employee's Final Check:
Employers can withhold amounts mandated by federal or state legislation, insurance costs, or expenses allowed in writing by the employee. However, they cannot deduct amounts for losses arising separately from an employee's work or resulting from negligence.
California law does not require employers to provide severance pay. Employees should refer to their employer's policy, and severance pay plans under ERISA are subject to federal law.
California participates in a joint federal/state unemployment insurance program. Employees may be ineligible for benefits under certain conditions, such as voluntarily quitting without good cause or willful misconduct.
Understanding the intricacies of the California Labor Code is essential for both employers and employees to ensure a fair process in the issuance of final paychecks following a voluntary or involuntary discharge. If you have any questions regarding issuing final paychecks or need guidance on California employment law, contact the Law Office of Catherine Chukwueke and schedule a consultation. We are here to help you navigate the complexities of employment law with confidence.
Disclaimer: This article has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice.