California has some of the strictest rules about payment of wages upon termination, and employers get this wrong ALL the time.  For some reason, people seem to think they have 24 hours in which to pay final wages after termination.  Nope, nope, and nope.

FINAL WAGES, INCLUDING ALL ACCRUED AND UNPAID VACATION OR PTO, MUST BE PAID TO EMPLOYEES ON THEIR FINAL DAY OF EMPLOYMENT IF THEY ARE BEING TERMINATED OR IF THEY HAVE RESIGNED WITH AT LEAST 72 HOURS’ NOTICE.

That final pay must also include all earned commissions, by the way.  Commissions are wages.  There may be an issue as to when those commissions are earned, and if you have a question about that, we should be looking at your written commission agreement.  Don’t forget that all commission agreements must be in writing under California law. 

If and only if the employee has given less than 72 hours’ notice, you have 72 hours to pay the employee their final wages.  In that case, you must make the final wages available at the last place of work within those 72 hours, or, if the employee so indicates in writing, the final check may be mailed to the address where the employee advises.  DO NOT put the check in the mail until and unless the employee advises, lest the check goes missing and now you have not paid the employee properly.   If you do not get the employee paid timely, California Labor Code Sec 203 says that the employee is entitled to a day of wages every day for 30 days until the employee is paid.  That is what we call “waiting time penalties.” 

Also, do not pay the employee by direct deposit – the right to pay by direct deposit ceases upon termination UNLESS the employee has already pre-authorized you to pay final wages upon termination by direct deposit.  We covered this issue last year in another MMB.

Now, I promised you a few tricks about these issues.  Here is one.  Let’s say you have an employee whom you know you want to terminate but is dodging coming to meet with you.  How do you get this employee their final paycheck?

Employees will sometimes play the game of avoiding the meeting, knowing they are going to be terminated, in part because they don’t want to bother to come in just to be fired, but also, they know you must get that final check to them.   Sometimes they will play hard to get and refuse to take it, knowing that if you do not pay them timely, those waiting time penalties will start to run. They will claim they have moved if you send it or have it delivered.  They will play hide and seek.  Don’t let them play this game.

The better way to handle this is to set the meeting and let them fail to show.  If you let it happen a few times, you can call it a no-show, no call and label it “job abandonment.”  Once you do that, you can take the position that they have abandoned their job and resigned, effective that date.  Voila! Now you have a resignation, and you can tell them that you will have their check ready for them within 72 hours, or you can mail it and ask them to let them know where. 

Interestingly, the last few times we have done this; the employee separation went much smoother.   Nobody likes to be fired for cause.  We put whatever termination letter we had drafted in the file with a note that says, “termination letter was never given – employee failed to show for final meeting; separated for job abandonment” and put the note in the employee’s file.  Everybody goes on their way.    That may not work for every situation, but it’s one option.