Updated: May 6, 2024
Having amazing employees is critical to helping you operate and grow your business but most employees won’t stay with you forever. Whether an employee is terminated or if they decide to move on to a different opportunity, you’ll still have to write them a final paycheck for the time they worked. And you typically have a tight deadline to get it done — either immediately or within a few days, depending on your state.
If calculating final pay sounds daunting, don’t worry. The calculator below makes it easy to run an off-cycle paycheck for departing employees and meet your federal and state withholding tax requirements. All you have to do is enter the employee’s gross wages earned during the final pay period, as well as their W-4 withholding information. Our calculator will do the rest of the work for you. Additionally, below the tool there’s more general information for employers about rules involving final paychecks.
What’s the federal government’s rule about final pay?
It may come as a surprise, but Uncle Sam does not weigh in on the subject of final paychecks. The Department of Labor defers to each state when it comes to how this works.
When does an employer have to provide final pay after the employee is no longer employed?
Because there is no one standard, this can depend on where you do business. For example, in California, should an employee provide a 72-hour notice before quitting, they are supposed to receive final pay the day they leave (if they fail to provide notice, the law states they should receives their pay within 72 hours). This is different from Maine, where an employee needs to receive their final pay by the next payday. The takeaway is that it can be a little tricky to keep track of it all. If you’re unsure of your obligations, we put together a state-by-state final paycheck guide, with a clickable map and information for each state’s rule. Because rules can be subject to change, we also included links so that you can always go directly to each jurisdiction for more information.
Does every state have a law?
Though almost every state, plus Washington, D.C., has laws in place, it may come as a surprise to find out that not every place of business has a rule on the books. For example, Alabama, Florida, Georgia, Mississippi, and Missouri are without regulations.
Final thoughts on final pay
Please note that even if you must fire an employee, you cannot make their final paycheck conditional, or withhold any unpaid wages that they are due. Don’t forget to take into account any accrued or unused vacation or sick days that the soon-to-be-former employee may be entitled to a cash payout. Again, this depends on your state’s requirements, so it’s worth doing a little research — even in the case of termination.
Compliance here isn’t optional: if you don’t follow your state’s policy, you could end up getting sued or fined. And the penalties differ depending on your place of business. For example, in Oregon, penalties for willfully failing to pay an employee’s final wages begin at $1,000, not including potential legal fees. In Connecticut, depending on the amount owed to the employee, an employer may face a fine of up to $5,000, as well as jail time.
If you have additional questions about calculating payroll taxes, please visit our payroll calculators page for more information and links to payroll tax information for each state, or learn more about how to process payroll.