Saying goodbye to an employee is never easy — but getting their final paycheck wrong can turn a difficult situation into an expensive legal nightmare. California has some of the strictest final pay requirements in the nation, and even small mistakes can result in significant penalties that add up fast.

Here are five final pay mistakes that could cost your business:

1. Missing the Final Pay Deadline
California requires final pay immediately upon termination (fired employees) or within 72 hours (resignations without notice). Late payments trigger waiting time penalties of up to 30 days of wages.

2. Forgetting Accrued Vacation Time
Unused vacation must be paid out at termination — it’s considered earned wages. “Use it or lose it” policies are illegal in California and can lead to costly disputes.

3. Withholding Final Pay for Company Property
You cannot withhold an employee’s final paycheck for unreturned laptops, uniforms, or tools. California law requires separate collection processes for company property.

4. Incorrect Calculation of Final Hours
Final pay must include all worked time through the last day, including overtime. Miscalculating these hours can trigger both wage claims and penalties.

5. Using the Wrong Pay Method
Final pay must be immediately available to the employee. Mailing checks or requiring pickup during limited hours may violate California’s accessibility requirements.

Need Help Getting Final Pay Right?
DP Human Capital Management can help you establish compliant termination procedures that protect your business from costly final pay violations. Don’t let your last interaction with an employee become your biggest HR headache.

Schedule a final pay compliance review today.