When you terminate an employee in California, you must follow precise legal requirements for the final paycheck. The state sets clear guidelines, and breaking them brings serious financial consequences. Handle final wages properly to stay compliant and maintain integrity in your operations.
When to give the final paycheck
If you fire an employee, give their final paycheck immediately. You must issue all earned wages on the same day you end their employment. This rule still applies even if you provide no advance notice. The law doesn’t allow extra payroll processing time.
When an employee gives at least 72 hours’ notice before resigning, prepare and deliver the final paycheck on their last day. If the employee quits without notice, you have up to 72 hours to pay them.
What the final paycheck must include
Include all earned compensation in the final paycheck. Cover base wages, overtime, unused vacation time, and any earned bonuses or commissions. California law counts unused vacation time as earned wages. You can only exclude carryover if your written policy clearly states that.
Pay commissions the employee earned, even if you haven’t received the client’s payment yet. If the employee earned it, include it. Double-check everything—the law punishes paycheck errors with additional penalties.
How to deliver the final paycheck
Hand the final paycheck directly to the employee on their last day. If you mail it, postmark it on the same day. For employees who resign without notice, follow the 72-hour deadline for either delivery method.
If the employee asks you to mail it to a specific address, honor the request and save mailing proof. This record protects you if a dispute arises later.
Why these rules matter
When you delay final pay, California law charges you waiting time penalties. You owe the employee one day’s wages for each day the check is late, up to 30 days. That adds up fast, especially if several employees leave around the same time. Follow the rules to avoid penalties and promote fair treatment.
Paying employees on time after termination protects your business from penalties and strengthens your workplace reputation. When you follow the rules, you show that your business runs with care and fairness. Keeping proper records and following clear policies will help you stay on track and avoid unnecessary risks.