Final Pay: What Employers Need to Know

This might include accrued but unused paid time off (PTO), bonuses, commissions, and reimbursement for business expenses. For example, California requires unused vacation time to be paid out at the time of a termination. Some states have no law that requires a business to provide final wages in a certain timeframe, but most states do. The issue of payment of wages mostly depends on whether the employee quit or was involuntarily terminated. The most widely followed procedure for employees who quit is for wages to be mailed or sent by direct deposit by the next scheduled payday. The laws vary when it comes to the final paycheck for terminated employees, but in general, payment is required in a more timely manner than if the employee quit.

Final paycheck laws by state: Map

• That way, the bonus amount won’t be included in the year-to-date total.
• Federal legislation requires the reporting of both taxable and non-taxable sick payments made to employees from a third party.
• ADP does not warrant or guarantee the accuracy, reliability, and completeness of the content on this blog.
• Employers are not required by federal law to give former employees their final paycheck immediately.
• I need to issue a final paycheck for an employee outside of our normal pay dates and for some reason I just can not figure out a way to do that.

It’s time to whip out your employee termination checklist to see what you need to do. And one of the responsibilities on said checklist is giving terminated employees their final paycheck. Staying up to date on compliance rules can be cumbersome but is critical. For example, employers who don’t comply with their state’s final paycheck laws risk fines, penalties, interest accrued, and wage claims. When an employee leaves your company, you have a responsibility to ensure that they receive their final pay in accordance with federal and state law.

• You can review the forms ADP® files on your behalf in the RUN Powered by ADP® platform.
• Keep in mind that the employee’s final paycheck isn’t the same thing as severance pay.
• Check your state law for details and consult legal counsel if you are facing this difficult situation.
• Once you have your registration code, you can register at login.adp.com.
• In California, the penalty can be as much as 30 days of the employee’s wages.

Q: If I use direct deposit, do I need to provide a wage statement to employees?

Please obtain your self-service registration code from your company Payroll or HR department. Once you have your registration code, you can register at login.adp.com. To ensure balances are cleared, the Clear Balances At Year End box must be checked before the first payroll of the Default Accrual Period is processed. The Default Accrual Period is set on the Company level and can be overridden on the Employee level. You can view your tax forms by logging into the RUN Powered by ADP® platform and clicking Review Tax Documents under the Taxes tab.

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Non-compliance can also damage an employer’s reputation, impacting employee trust and leading to further scrutiny from labor boards or state agencies responsible for enforcing wage laws. Form 1099-MISC is the miscellaneous income form that employers must file for non-employees who are paid compensation of $600.00 or more (including rents, royalties, prizes, awards, etc.) during the year. If you want to surprise your employees with the bonus, consider processing an Off-Cycle Payroll after you run your regular payroll.

Stay up-to-date on payroll dates with our 2025 Payroll Calendar Templates

This can occur if an employee defaults on a loan, has unpaid taxes or is required to pay child support or alimony. This powerful tool does all the gross-to-net calculations to estimate take-home pay in all 50 states. For more information, see our salary paycheck calculator guide. Direct deposit allows employers to electronically transfer employees’ net pay into their bank accounts, eliminating the need for employees to receive a paper check. Below, we answer some of the top questions we receive about direct deposit.

Before THE last payroll of the year

Employers often have questions about their rights when an employee leaves and fails to return company equipment. As a general rule, employers are prohibited from withholding an employee’s final paycheck until an employee returns company equipment. The applicable final pay deadline must be met even if the employee hasn’t returned company property. For example, for employees who quit, California’s final paycheck law requires payment of wages within 72 hours or immediately if the employee gave at least 72 hours’ notice. If the employee is discharged in California, then the law requires employers to provide any and all compensation due at the time of separation.

Final Paycheck Laws by State 2025

The information in this guide is provided solely as a courtesy and should not be construed as legal, financial or tax advice. Federal legislation requires the reporting of both taxable and non-taxable sick payments made to employees from a third party. Sick pay should be included on either the employees’ W-2s or on a separate form provided by the third party. If third party sick pay is not reported by the third party, it must be included on your employees’ adp final paycheck W-2s.