Last Paycheck Laws by State 2025

An employee’s first thought on their last day often goes to pay. Departing from a job is a sensitive transition, and following last paycheck laws supports a more respectful and orderly separation of employee and employer. But when and how to issue an employee’s final wages isn’t always clear. 

In this comprehensive guide, we cover all things final paycheck laws — from the basics of what they are and how they differ between states to your responsibilities as an employer.

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Final Paychecks 101

Last paycheck laws guarantee departing employees receive prompt pay and ensure the organization prioritizes employee wages over other business expenses. On the employer’s side, these laws support an orderly, efficient separation, mitigating risk for wage complaints and reputational damage.

The final payout an employee receives will depend on the type of separation taking place — whether an employee is let go, terminated, or retiring — and a key distinction exists between an employee's final paycheck and severance. 

Final pay is legally required, earned compensation for work the employee has already completed. Depending on state laws, final pay may include accrued, unused PTO.

Severance pay is additional compensation that is most often provided in the case of involuntary terminations that don’t have cause, like in the case of a reduction in force, but not when an employee quits or is terminated. Severance pay is often calculated based on tenure at the company and seniority.

Federal vs. State Final Paycheck Compliance

Final paycheck laws operate under a dual system of federal and state regulations. The Fair Labor Standards Act (FLSA) establishes a baseline federal guideline for last paycheck, which allows employees to receive their final paycheck by the next regular payday. States can implement their own, more prescriptive laws, provided they don't conflict with federal standards.

Jurisdictional Variations

State laws differ significantly in several key areas:

• Timing of final payment
• Delivery methods
• Rules for deductions
• Requirements based on circumstances of termination

For example, while federal law doesn’t require immediate payment to terminated employees, several state laws have stricter timelines. California, Massachusetts, and Oregon require payment by the end of the business day or next business day for employees who have been fired. Alabama, Florida, Georgia, and Mississippi do not dictate any laws related to the timing of final pay, so FLSA statutes protect employees in these states. 

Final Paycheck Requirements, Withholdings, and Deductions

Final checks must include all regular, unpaid wages from the last pay period, along with any other compensation that is required by law. This could be accrued but unused PTO, commission, supplemental compensation like bonuses, and any expenses that need to be reimbursed. 

Former employees may also see deductions on their paychecks, but these paycheck withdrawals are tightly governed by law. In general, the main payroll deductions legally permitted are for payments owed by law, like child support payments, unpaid taxes, benefit deductions, other garnishments, or deductions ordered by part of a collective bargaining agreement. Very few states allow employers to deduct other costs, such as those for unreturned equipment, with written authorization from the employee. 

Federal laws define what employers may do, but state laws tell them what they can do.

On the federal level, the FLSA does allow employers to deduct certain items from a final paycheck, as long as the deductions don’t bring down the employee’s pay to less than the federal minimum wage.

Yet as Susan Buckner, JD, writes on FindLaw.com, an online legal resource, “Federal laws define what employers may do, but state laws tell them what they can do.” Federal law permits this, but few state laws allow for it in practice. Where deductions are allowed, they most often require that employees have consented to these deductions in writing. 

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Consequences of Noncompliance

In 2016, Apple was ordered to pay out $2 million to affected workers for failure to issue timely paychecks, among other violations. And the global staffing company Adecco is currently facing a class-action lawsuit alleging their failure to provide timely final wages to employees upon separation. 

As these cases illustrate, companies that violate final paycheck laws face serious consequences. Lawsuits may be brought against the organization, as in these cases, or companies may face fines and be required to pay additional compensation to affected employees. For example, Arkansas law requires that a terminated employee be paid by the next regular payday, but if the company fails to comply within a week of the payday, the employee is owed double the wages. 

Employers that fail to comply with final paycheck laws also make themselves the likely subject of increased scrutiny. State labor departments actively investigate these violations, which can lead to administrative hearings, formal citations, and more regular audits. 

Beyond direct financial costs, non-compliant employers typically suffer from reputational damage that makes it difficult to attract top talent and may result in higher turnover among existing employees. 

Employee Recourse

Employees who haven’t received their final paycheck by the scheduled payday for the last pay period should contact their state labor department or the Department of Labor’s Wage and Hour Division.

Note: See the State-by-State Guide section below for a comprehensive list of state-specific requirements.

Final Paycheck Laws by State

Adapted from applicable laws and LawInfo’s Final Paycheck Rules by State, by Sydney Goldstein, which was last updated March 13, 2025.

The below dropdown list features all 50 states and the District of Columbia. 👇

Compliance Challenges

Companies need reliable, accurate tools to support HR with final paycheck laws as jurisdictional requirements can vary significantly. State laws can differ on timeline for disbursal, methods of delivery, and rules for deductions, among other details, and are most often triggered by the time of termination. The challenges of maintaining compliance include: 

• Varying state requirements: Companies operating in multiple states must navigate different timeline requirements, calculation methods, and penalties for each location.
• Calculating complex final payments: Determining the correct amount can be complicated, especially as it must take into account regular wages, commission, overtime, bonuses, and accrued PTO or vacation time where applicable.
• Timing: Depending on state law, the employer’s accounts payable function may be responsible for processing final payments outside normal payroll cycles, like if terminations occur unexpectedly or mid-pay period. 
• Policy conflicts: This process can be complicated by the fact that company policies may not align with state laws, like “use it or lose it” vacation policies in states where accrued vacation must be paid out.
• Managing deductions: Uncertainty about what can be legally deducted from final paychecks, like advances, equipment costs, or other company property makes it tricky to remain compliant without a dedicated payroll tool.
• Remote workers: Determining which state’s laws apply when employees work remotely across state lines further complicates managing final paychecks.
• Coordination breakdowns: Poor communication between HR, payroll, and management, especially during large-scale layoffs or when termination decisions are made, quickly exacerbates these hurdles.

These challenges highlight why many companies opt for payroll software that ensures timely and correct final pay that remains compliant with all applicable laws. 

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Best Practices For Managing Last Paychecks

Staying in lockstep with the various laws governing last paychecks for your employees, especially as an across-state-lines employer, is no easy task. Follow these best practices to stay organized and compliant.

• Prioritize compliance: It’s your responsibility as an employer to maintain strict compliance with all applicable laws. As mentioned, some states require that final paychecks be provided immediately after an employee has been terminated, while others allow for more flexible timeframes. Use tools and technology that ensure your organization meets compliance across the various states in which you do business or have employees. 
• Clearly communicate: Leaving a job is stressful enough. Help ease the transition by proactively communicating to employees when and how they will receive their final paycheck. Be sure to include a clear breakdown of the final payment, especially if there are any deductions. A detailed breakdown of their final paycheck will help prevent misunderstandings or disputes. 
• Leverage resources: There’s no need to reinvent the wheel here. While payroll, including the laws around final paychecks, can seem complicated because of the overlapping jurisdictions and differences among states, there is always a correct answer. Rather than stressing about the intricacies of managing payroll, leverage resources like a reputable payroll provider to ease the burden.
• Maintain clear documentation: To support compliance and protect against any potential disputes, keep records of all aspects of final pay, including calculations, delivery method, and timing. If you work with a payroll platform, the system acts as a secure storage house for this information. 

In following these best practices, you can not only ensure legal compliance but also show respect for departing employees during what is often a sensitive transition. 

How Lattice Payroll Simplifies Last Paycheck Compliance

Issuing final paychecks can get complicated, but payroll systems provide the structure, automation, and compliance needed to do so correctly.

When it comes to final paychecks, Lattice Payroll ensures accurate deductions based on local laws, provides audit trails and detailed reporting, and has a built-in AI anomaly detection that can help identify errors and potential compliance issues. 

Schedule a demo of Lattice Payroll today to see how it takes the hassle out of issuing final paychecks and simplifies payroll management.

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