State wage payment laws generally provide for the intervals in which employees must be paid, and how and when they must be paid when they leave. Since the laws vary, and there are often harsh penalties for a violation, it is important for an Employer to know what their own state law demands.
In West Virginia, traditionally one of the harsher jurisdictions for wage payment, there was some good news this year. Employees who are fired must be paid their final paycheck within four business days of the involuntary termination. This may not sound like a long time, but the law used to mandate 72 hours, with no exception for business days. If an Employer waits too long, the penalty is 3 times the unpaid wages. The Employer may be on the hook for an employee’s legal fees as well.
In the District of Columbia employees who are fired are in most cases entitled to their final wages by the next workday after their termination. The penalty for the Employer can be as much as 2 times the unpaid wages, depending on how late the payment is. The Employer must consider not just the timing, but also the amount of that final payment. It may not just be straight wages.
What about fringe benefits? Does the Employer have to pay cash value for unused sick and vacation time? This will depend on your employment policies. In West Virginia, for example, an Employer who does not explicitly exclude these benefits from final wages in its employment policies could be required to pay the cash value of unused benefits at the time of termination, with the specter of treble damages if the benefits are not calculated and paid within four business days.
An employer could find themselves in the painful position of having to write a very large check to an employee who may have otherwise deserved to be fired. Remember that whatever the reason for the firing, it normally does not affect an Employer’s responsibility for complying with a wage payment law.
The best way to prevent an unpleasant outcome is to know the law in your state and be prepared. Consulting an attorney now to get termination procedures and benefits policies in order can save money and headaches down the road.