Introduction
A final paycheck is the last payment an employee receives after employment ends—whether via voluntary resignation, layoff, or termination. It’s not just a typical paycheck; it involves additional legal obligations, timing rules, and often extra pay components. Everyone—employees and employers alike—benefits from understanding what must be included and when the payment is due.
What Makes Up a Final Paycheck?
The contents of a final paycheck typically go beyond just the standard earnings. Key components usually include:
- Earned Wages: All compensation for hours worked or salary accrued up to the termination date. This includes any overtime or commissions earned in the last pay period that have not yet been paid.
- Unused Vacation or Paid Time Off (PTO): If the employer’s policy or state law requires payment for accrued but unused vacation or paid leave, those amounts are included.
- Severance Pay: If there is an agreement or company policy that offers severance upon termination, this may be part of the final payout—sometimes as a separate payment, other times included with the final paycheck.
- Expense Reimbursements: Any pre-approved, unpaid expenses that the employee has submitted (e.g. supplies, travel, business-related costs) should be reimbursed with the final paycheck if required.
- Required Deductions: Taxes (federal, state, local), Social Security, Medicare, benefit deductions, garnishments—all deductions that apply under normal payroll must still be accounted for in the final payment.
Legal Requirements & Timing
The timing of when a final paycheck must be delivered depends on the nature of termination and local laws. Key timing rules typically include:
- Voluntary Resignation: Many jurisdictions allow employers to use the next regular payday for the final paycheck—or require payment within a certain number of days after resignation.
- Involuntary Termination: If an employee is fired or laid off, many places require immediate payment or within a short time frame (for example, within 72 hours or the next business day).
- State-Specific Laws: Laws vary widely. Some states require that unused vacation be paid out on the date of termination; others allow a small window. It’s essential for both employers and employees to know what their state mandates.
Type of Payment Methods
Final paychecks may be delivered in the same method used for regular wages or via methods required by law. Common approaches are:
- Direct Deposit: If the employee normally receives payment via direct deposit, many employers must ensure the funds are transferred on the final day or by the deadline required under state law.
- Paper Check: If paychecks are mailed or handed out, employers must issue the check promptly—often in person or via mail—to meet legal deadlines.
Common Issues & Disputes
Final paychecks can lead to misunderstandings or disputes in certain scenarios. Key issues to watch for include:
- Missing Items: Unused PTO, commissions, or bonuses that were earned but not reflected.
- Unauthorized Deductions: Deductions for property loss, uniform damage, or other claims that weren’t agreed upon in writing.
- Payroll Errors: Incorrect calculation of gross or net pay, forgetting overtime, or misapplying tax or benefit withholdings.
- Late Payment: If final pay isn’t issued within required legal time frames, the employer may face penalties or legal claims.
What Employees Should Do If Final Paycheck Is Missing or Wrong
If you don’t receive your final paycheck on time or believe there’s an error, consider these steps:
- Contact HR or Payroll: Ask for a detailed explanation. It may be a simple clerical or administrative oversight.
- Review Company Policy & State Law: Know your rights—many states have clear rules for what must and when must be paid.
- Gather Documentation: Keep copies of time sheets, pay stubs, statements of vacation accrual, emails, or any relevant employment records.
- File a Wage Claim: If discussions don’t resolve the issue, you can file a claim with your state labor department or wage commission.
- Legal Counsel: In severe cases, consulting an attorney may be necessary.
Internal Resources / Reference Examples
If you need a clear example of how a final paycheck should look, including all required fields and deductions, using a sample stub can help you recognize missing or incorrect items.
Generate a sample final paycheck stub or examine layout options in our Regular Pay Stub guide.
Conclusion
A final paycheck is more than just a parting payment—it’s a legal obligation. It should include all earned wages, unpaid benefits, and other compensations, minus proper deductions, and be delivered on schedule. Knowing your rights and keeping records ensures you receive everything you’re due when your employment ends.
