FINAL PAY AND ACCRUED LEAVE A departing employee is entitled to be paid at the agreed rate for all work actually performed up to the time of termination. The employer cannot withhold wages on the ground that the employee failed to give two weeks’ or some other specified notice before quitting. Nor can the employer dock the wages of a fired employee on the theory that the employee’s work quality was unacceptable.
State law also specifies when a departing employee must be paid. In some states, the final paycheck does not need to be issued until the next regular payday. In others, the departing employee must be paid immediately or within a few days of termination, depending on the circumstances of termination.
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The employer may deduct from the employee’s paycheck any claims the employer has against the employee, so long as the employee has agreed in writing to the deduction. Suppose, for example, that the employee borrowed money from the company, to be repaid out of future paychecks. Or suppose the employer advanced unearned leave on the understanding that, in the event of an early termination, the employee would make reimbursement out of final wages. In these examples, an appropriate setoff against the employee’s paycheck is permitted. However, the employer should not deduct the amount of a disputed claim or any other amount not agreed to by the employee, since doing so may violate wage and hour laws. Nor should any deductions reduce the employee’s pay below the minimum wage.