Final paycheck
A final paycheck is the last wage payment an employer owes a departing employee, covering wages and earned variable pay through the last day.
- LAW
- State wage-payment law; no federal immediate-pay rule
- DEDUCTION LIMIT
- Employer-benefit charges can’t cut FLSA minimum or overtime
- DEADLINE
- Set by state; some require immediate payment
- WATCH FOR
- Paying after the state’s final-pay deadline
State law sets the deadline and often decides whether accrued paid time offPaid time off (PTO). Paid time off (PTO) is a single bank of paid hours an employee draws from for vacation, illness, or personal reasons.Click to open the term must be cashed out. Federal law does not require you to pay a former employee immediately, though some states do. Because the deadline rarely lines up with the payroll calendarPayroll calendar. A payroll calendar is an employer’s published schedule of pay periods, pay dates, and processing deadlines for the year.Click to open the term, final pay often runs as an off-cycle payrollOff-cycle payroll. An off-cycle payroll is a payroll run outside the normal schedule that pays an omitted or additional amount.Click to open the term. Record the termination date and the final-pay instruction on the employee record when you enter the separation.
What goes into a final paycheck?
Payout of accrued paid time off depends on state law or your own policy. Two employees leaving in different states can receive different totals. Benefit deductions may stop on a different date than coverage ends. Get qualified legal guidance before deciding what a final payment includes.
- 01
Start with regular wages through the last day worked.
- 02
Add the variable pay actually earned: approved overtime, commissions that have closed, piece or flag earnings, and shift premiums.
- 03
Cash out accrued paid time off where state law or your own policy requires it.
- 04
Apply only permitted deductions: state law can limit deductions from final pay, including amounts for unreturned equipment or an outstanding advance.
When is a final paycheck due?
State law sets the deadline. Confirm the current deadline with the state labor agency.
| RULE | DISCHARGED EMPLOYEE | EMPLOYEE WHO RESIGNS |
|---|---|---|
| Federal law | Not required immediately | Not required immediately |
| Some states | May require immediate payment | Varies by state |
| Illinois | Next regular payday at the latest | Next regular payday at the latest |
Frequently asked
- U.S. Department of Labor, Last Paycheck
- U.S. Department of Labor, Vacation Leave
- 29 CFR 531.35, “Free and clear” payment; “kickbacks”
- Illinois Department of Labor, Wage Payment and Collection Act FAQ
General information, not legal or tax advice. Apply current federal and state rules with qualified guidance.