Termination Payments
A variety of state laws govern how soon employees are to be paid after their employment is terminated. The key factor in these laws is whether an employee leaves a company under his or her own volition or if the termination was forced by the company. Exhibit 9.5 lists the time periods by state by which termination pay must be given to those employees who have voluntarily left employment. In all cases, the intervals listed are for the earlier of the next regularly scheduled pay date or the number of days listed in the first column. If a state is not listed in the table, assume that the termination payment is required at the time of the next regularly scheduled pay date.
|
Maximum Payment Delay |
Applicable States |
|---|---|
|
4 Days |
California |
|
5 Days |
Oregon, Wyoming |
|
7 Days |
District of Columbia, Nevada |
|
10 Days |
Idaho |
|
14 Days |
Kentucky, Maine, Nebraska |
|
15 Days |
Louisiana, Montana |
|
20 Days |
Minnesota |
|
21 Days |
Tennessee |
Exhibit 9.5: Required Pay Interval for Voluntary Terminations
Exhibit 9.6 lists the time periods by state by which termination pay must be given to those employees who have involuntarily left employment. In all cases, the intervals listed are for the earlier of the next regularly scheduled pay date or the number of days listed in the first column. If a state is not listed in the table, assume that the termination payment is required at the time of the next regularly scheduled pay date. Also, note that many more states have adopted early-payment laws for involuntary terminations, indicating a much greater degree of interest in paying off employees who fall into this category.
|
Maximum Payment Delay |
Applicable States |
|---|---|
|
Immediately |
Colorado, Hawaii, Illinois, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nevada |
|
1 Day |
Connecticut, District of Columbia, Oregon, Utah |
|
2 Days |
South Carolina |
|
3 Days |
Alaska, Arizona, Louisiana |
|
4 Days |
California, New Hampshire, Vermont, West Virginia |
|
5 Days |
New Mexico, Wyoming |
|
6 Days |
Texas |
|
7 Days |
Arkansas |
|
10 Days |
Idaho |
|
14 Days |
Kentucky, Nebraska |
|
15 Days |
North Dakota |
|
21 Days |
Tennessee |
Exhibit 9.6: Required Pay Interval for Involuntary Terminations
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If the human resources department is coordinating an employee layoff, it is best to notify the payroll supervisor at least a day in advance, so this person can coordinate the proper calculation, printing, and signing of termination payments before the layoffs are begun. By doing so, an employer can hand out final paychecks at the time of termination and not have to worry about state laws that sometimes mandate immediate payments to employees. Also, by calculating these payments in advance, there is less chance of incorporating a calculation error, which is likelier to occur when under the pressure of having a terminated employee waiting for his or her final payment.
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