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15760 Ventura Blvd, Suite 610 Encino, CA 91436
FREE CONSULTATION818-436-2775
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Personal, Affordable Payroll Services, Bookkeeping, and Tax Processing for Small Business throughout Los Angeles County.

Payroll Requirements on Employee Termination When Fired, Laid Off, or Quit

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Dan had given his employee, Sandy, at least three warnings, and written each one up in her file. She was late again, and he was done. So he:

  1. Called her into his office and told her he was letting her go. He had his administrative assistant give her a check for the hours she had worked.
  2. Called her into his office, gave her the goodbye speech, and told her she could pick up her check tomorrow.
  3. Was so angry when he told her to leave that they had no discussion about her final pay. He sent it to her address on Friday with the next payroll.

Each of these situations is likely to have Dan paying out substantial money to Sandy for his failure to follow the rules around employee termination. The rules vary from state to state, but in California a terminated employee must be full paid immediately upon termination. Let’s review the above again:

  1. It is possible that Dan did okay in this case, but not likely. He and his staff very likely failed to include vacation pay, accumulated sick leave, or PTO. If Sandy is even $1 short of what she is owed as the result of the failure to include all amounts due, she is able to collect full pay for up to 30 days for each day that she was shorted. The exception is when the shortage was unintended error.
  2. In this case Dan would have to pay for one days wages, as she was denied immediate payment of amounts due her.
  3. In this case Dan would be required to pay for as many days as it took for Sandy to receive the check.

When you are going to terminate an employee, it is best to plan in advance. These rules apply to termination for cause and for lay offs. It is also better to use a payroll service like ATPP to prepare that last paycheck so that all amounts due are included. This could save you a substantial amount of money.

What if the employee quits? In most cases where there is no specific contract, the employer has 72 hours to pay the employee UNLESS the employee has given the employer at least 72 hours notice. In this case, the final check is due on the day the employee leaves.

You may pay the employee at the place of employment, by mail, or by other customary methods such as direct deposit. If by mail, you will be well advised to have the consent of the employee to mail the amount on the date due.

There are many exceptions to these rules for certain industries. If you assume that you are required to pay immediately for terminated employees and within 72 hours for those who leave voluntarily, you should be on solid ground.