Let’s face it, every employee, at some point, has to part ways with their job. It could be a happy reason like moving to a new city, getting a better-paying offer, or finally starting that dream business. Or it could be something less ideal, retirement, layoff, or getting fired. Whatever the case may be, there’s one thing that remains consistent: if you’ve worked, you’re owed your final paycheck.
Now, there are rare exceptions, like if an employee is caught stealing or causing financial loss to the company. In those cases, the employer can take legal action to recover the damages. But those are the outliers. In the majority of situations, the employee is entitled to be paid what they’ve earned. And when we say “entitled,” we’re not talking about vague workplace courtesy. We’re talking about actual legal rights backed by state law.
This blog is all about breaking down the specific rules and requirements for final paychecks in California, a state that doesn’t mess around when it comes to labor laws. If you’re in payroll, HR, or just someone trying to do things by the book, keep reading. We’re going to cover everything you need to know, with examples to make it all stick.
When Does the Final Paycheck Need to Be Paid?
Let’s start with timing, because when it comes to final paychecks in California, the clock really matters.
1. If the Employee Quits (With At Least 72 Hours’ Notice): If someone gives notice, say, “I’m leaving next Friday”, then they must be given their final paycheck on their last working day. No delays. No “we’ll mail it later.” It needs to be ready when they walk out that door.
If you want to know more about withdrawal of resignation rules, do check out our in-depth blog.
2. If the Employee Quits Without Notice: No notice? Then you’ve got 72 hours from the moment they quit to get them their final check. Let’s say someone sends a “peace out” email on a Tuesday afternoon. You have until Friday afternoon to pay them. But here’s the catch: if they come to the office before the 72 hours are up and ask for the check, you still have to pay them then and there.
3. If the Employee Is Terminated or Laid Off: This one’s stricter. If you fire someone or lay them off, their final paycheck is due immediately, on the spot. Fire someone at 11 a.m.? Their check better be ready at 11:01. California doesn’t care if accounting “needs more time.” If you want to know more about termination without notice, do check out our in-depth blog.
What Must Be Included in the Final Paycheck?
It’s not just about the base salary. California law says the final paycheck must include all wages owed. That includes:
- Unpaid salary or hourly wages
- Unused vacation or PTO (Note: California treats accrued vacation as earned wages. You can’t just make it vanish.)
- Commissions and bonuses (if they’re already earned and calculable)
Example: If someone has 40 hours of unused vacation and they make $30/hour, that’s $1,200 you owe them, on top of their last week’s pay. What’s not included? Sick leave payouts, those don’t have to be cashed out unless your company policy specifically says so.
To read about Whether Employers Can Treat Advanced Vacation Payments As Overpayments If An Employee Terminates, dive into our in-depth blog.
Penalties for Missing the Deadline
California isn’t just making suggestions here, there are real consequences if you don’t follow the rules. Waiting Time Penalties: If an employer is late in delivering the final paycheck, they could owe the employee a full day’s wage for every day the paycheck is late, for up to 30 days.
Let’s say you owe someone $200/day in wages and you pay them 10 days late. That’s an extra $2,000 you now owe on top of the original amount. And yes, this applies even if the delay was an “honest mistake.”
Can Employers Withhold Final Pay?
Short answer: Not really. Employers cannot hold back a final paycheck just because the employee hasn’t returned a laptop, ID card, or other company property. You can ask for the stuff back, and even take legal action if needed, but you cannot use the paycheck as leverage. That’s illegal.
How Should the Final Paycheck Be Delivered?
Ideally: in person. If the employee quits with notice or is fired, they should get the check right away, at work.
If the employee quits without notice and doesn’t want to pick up the check, then the employer must mail it to the address the employee provides or their last known address.
Electronic payments (like direct deposit) can only be used for final pay if the employee already agreed to it during their time with the company. No surprise Venmo transfers.
Special Note on Temporary or Seasonal Employees
Yes, all the same rules apply. Whether someone’s a full-timer, part-timer, intern, or seasonal hire, if they worked, they’re owed. The only thing that changes is how their final wages are calculated based on their arrangement.
What If There’s a Dispute?
Sometimes employers and employees disagree on how much is owed. Maybe someone claims overtime that wasn’t tracked properly. Even in those situations, the employer must still pay the amount they do agree on immediately. The rest can be sorted out later, but holding back the whole paycheck is not allowed.
Know Better About Payroll to Do Better
We hope this blog has provided valuable insights for payroll professionals in California. If you’re looking to deepen your understanding of payroll and accounting, we highly recommend checking out our expert-led payroll webinars. These sessions cover everything you need to know, from payroll rules and compliance to accounting best practices and industry updates.
Think of these webinars as practical, professional training designed to help you stay compliant, make smarter decisions, and support your company with confidence. Whether you’re new to the field or looking to stay ahead of changes, our payroll and accounting webinars are a solid resource worth exploring.
Conclusion: Respect the Exit
Here’s the truth: how you handle someone’s last paycheck says a lot about your company culture. It’s not just about ticking a legal checkbox, it’s about showing your team (and the world) that you take your responsibilities seriously, right up to the end. And in a state like California, where the rules are strict and the penalties are real, getting it right isn’t optional, it’s essential.
But the final paycheck is just one piece of the puzzle. Payroll is constantly evolving. Laws change. Best practices shift. What worked last year could cost you this year. So if you want to stay sharp, stay compliant, and avoid the “we didn’t know” excuse, invest in your own knowledge. Even something as accessible as payroll training online can make a real difference.
Because in payroll, what you don’t know can hurt you. But what do you know? That can protect your business, and your peace of mind.
