Payroll USA
...laws specifying the types of voluntary deductions that employers may and may not make...
timeline of when the final pay is due is shortened. Payroll should work closely with the human resources team to ensure the department knows if the employee gave written notice. For involuntary terminations, most payroll professionals think California is the strictest state in the union, when in fact ten states (California, Colorado, Hawaii, Illinois, Massachusetts, Michigan, Minnesota, Missouri, Montana, and Nevada) have regulations that indicate the employees must be paid immediately or on the day of termination. Another seven (Alaska, Washington DC, New Hampshire, New Mexico, South Carolina, Utah, Vermont) are within two to five days. Three (Arizona, AX, and Texas) are within six to seven days, with the remaining ranging from ten days to the next regular pay day. As previously mentioned, for voluntary terminations, they range from immediately (usually with notice) to the next regular payday. Generally, employers that provide accrued time off will need to pay it out. Look at state law where the employee is working and/or company policy. There are 22 states (Alabama, Alaska, Arkansas, Washington DC, Florida, Georgia, Idaho, Indiana, Kansas, Mississippi, Missouri, Nevada, New Jersey, New Mexico, Ohio, Oklahoma, Pennsylvania, South Dakota, Utah, Virginia, Washington, West Virginia) with no provision for paying accrued vacation. However, many of these states have a broad definition of wages that may include accrued vacation. There are 26 states (Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Iowa, Illinois, Kentucky, Louisiana,
Massachusetts, Maine, Michigan, Minnesota, Montana, North Carolina, New England, New Hampshire, New York, Oregon, South Carolina, Texas, Tennessee, Vermont, Wisconsin, Wyoming) that refer to company policy or union contracts or just make it mandatory. Finally, if you are in Maryland, Puerto Rico, or Rhode Island, look at the rules closely as they are very different than most of the others. Verify the state that employees are working in and ensure company policy speaks to paying accrued vacation to terminating employees. It is important to know the state laws where employees work. The laws that dictate final payment are always determined by the state the employee works in, not necessarily the laws of residence or incorporation. Additionally, penalties are dictated by the state the employee works in, not necessarily the resident state or state of incorporation. Six states (Alabama, Florida, Georgia, Illinois, Mississippi, Ohio) have no provision for penalties. There are nineteen states (Alaska, Colorado, Connecticut, District of Columbia, Hawaii, Hawaii, Maryland, Massachusetts, Michigan, Montana, Nevada, New York, Oklahoma, Rhode Island, Tennessee, Utah, Vermont, Washington, Wyoming) with a penalty that includes a criminal charge and/or jail time. These are pointed out to show that some states take final wage payments very seriously. Most states simply either
have a penalty that must be paid to the employee for failure to pay timely or a civil penalty collected by the state. Note that some states have specific laws for employees who quit and were responsible for the employer’s money or property. These provisions may allow a longer time to pay final wages. Most states have laws specifying the types of voluntary deductions that employers may and may not make. Company policy may need to clarify under which conditions voluntary deductions are taken from final wages. There are specific regulations under section 125 cafeteria plans as to the acceleration of certain deductions, such as flexible spending accounts. Ask what the company policy is and to see it. A little preparation will save an employer time and money. n This article is reprinted from the December 2019 issue of the APA’s PAYTECH magazine. The American Payroll Association (APA), www.americanpayroll.org, is the U.S. leader in payroll education, publications, and training. This nonprofit association conducts more than 300 payroll training conferences and seminars across the country each year and publishes a complete library of resource texts and newsletters. Representing more than 21,000 members, the APA is the industry’s highly respected and collective voice in Washington, DC. The Global Payroll Management Institute, www.GPMInstitute.com, spearheads the APA’s global initiatives to provide the world with a leading community of payroll leaders, managers, practitioners, researchers, and technology experts. Subscribers connect with each other through networking discussions, collaborative opportunities, and access to education and publications dedicated to global payroll strategies, knowledge, research, employment, and training. GPMI also publishes several global payroll texts and white papers as a benefit to subscribers.
37
| Professional in Payroll, Pensions and Reward |
Issue 62 | July/August 2020
Made with FlippingBook - Online magazine maker