What Small Business Owners Need To Know About Final Paychecks
The legal requirements for hiring and paying employees can be confusing enough for some small business owners – but there are other legal issues to keep in mind when it comes time to part with an employee as well.
"There are two issues an employer must keep in mind when issuing an employee's final paycheck: when must the check be paid, and what must be included in the paycheck," said Beth Milito in the web series NFIB’s Small Business Legal Ease.
As for when payment is due to a departing employee, many states require final payment on the next regular payday, but the timing may vary depending on whether termination was voluntary or non-voluntary. Milito also points out that some states, such as California, require that the final paycheck be issued within 72 hours.
What has to be included in the final paycheck? All earned wages – including all time worked and overtime – are due, but some states also require employers to pay for any unused, accrued vacation time.
To be certain of all legal requirements concerning the final paycheck, Milito said employers should check with their state’s labor department or their payroll provider. 2:21
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