Final Paycheck
Definition
The last payment issued to an employee upon separation from the company.
What is a Final Paycheck?
A final paycheck includes all earned wages up to the termination date, along with any applicable unused PTO, commissions, or bonuses. State laws dictate when and how final pay must be issued, and timelines may differ based on whether the separation is voluntary or involuntary.
Why is a Final Paycheck Important for Employers?
- Protects employee rights and ensures fair compensation
- Supports clean offboarding and sets the tone for a professional separation
- Required by law in most states, with strict deadlines
- Delays can trigger fines, penalties, or legal action
- Impacts COBRA eligibility, tax reporting, and unemployment filings
FAQs
When must a final paycheck be issued?
It varies by state; some require payment on the last day of work (e.g., CA), others within a set number of days.
Does the final paycheck need to include unused PTO?
Only if required by state law or company policy. Some states treat unused vacation as earned wages.
Can deductions be taken from a final paycheck?
Yes, but only for authorized, lawful deductions; improper deductions may result in wage violations.
How ExtensisHR Can Help
We ensure seamless final pay delivery by:
- Monitoring final pay deadlines in all states
- Coordinating accurate and timely payment
- Handling PTO payouts and final deductions
- Supporting COBRA notifications and offboarding documentation