The Final Paycheck Rules Employers Sometimes Get Wrong

Most California employers know that terminated employees must receive all wages due immediately. What many do not realize is that compliance involves more than timing—it also involves how the final paycheck is delivered.

For involuntary terminations or resignations with notice, final wages generally must be available at the time of termination. If the separating employee quits without notice, employers have 72 hours to provide the final paycheck. lt can be handed directly to the employee, delivered to the location where the employee is discharged, or provided in another legally compliant manner.

Employers should be particularly careful about relying on direct deposit for final wages, as California’s final pay rules are more restrictive than many assume. A mistake can result in waiting time penalties equal to up to 30 days of the employee’s wages.

The takeaway: final paycheck compliance is not just a payroll issue. A well-intentioned employer can pay every dollar owed and still face penalties if the final wages are not delivered correctly.