By Sally Padrow, HR Business Partner, Trüpp.
Employee separations have the potential of a company-wide ripple effect. The leadership team questions what they could have done to see this coming, managers scramble to transition projects, HR begins the process for filling the position, payroll computes final pay and ensures that it is direct deposited on the next scheduled pay date, while the employees are distracted as they try and figure out what is happening. Information is being shared across departments at a rapid pace to make sure there is a smooth exit plan.
The company is later surprised when they receive a notice requesting final pay information on an employee that separated from the company. The payroll department was diligent in ensuring that all hours worked and earned paid time off (PTO) was paid to them on the next scheduled pay date. So, why are they being asked for additional information?
A lot of companies are not aware of state laws regarding final paychecks. Oregon has a handful of laws that come into play, depending on when the employee gives notice or when the employee has been terminated by a company.
Read the following scenarios of Oregon separations and the correct action to take regarding final pay.
Judy has a family emergency and tells her employer on Wednesday afternoon, that Friday will be her last day of work. When is the final paycheck due?
Last day worked – If an employee quits with notice of at least 48 hours, the final check is due on the final day worked, unless the last day falls on a weekend or holiday. In that case, the check is due on the next business day. ORS 652.140(2) & (3)
John was terminated for poor performance on Monday. When is the final paycheck due?
By the end of the next business day – If an employee is discharged, the final paycheck is due not later than the end of the next business day. ORS 652.140(1)
Susan informed the company on Thursday, that this would be her last day of work. When is the final paycheck due?
Within five business days or the next scheduled pay date, whichever comes first – If an employee quits with less than 48 hours’ notice, excluding weekends and holidays, the paycheck is due within five business days, or on the next regular payday (whichever comes first). ORS 652.140(2)
An additional important note is if an employee is due their final check on their last day worked, you will need to know how many hours the employee is scheduled to work on that date. Inform payroll of how many hours to pay and ensure that the employee does not exceed that time. If they do work over, you will have to process another check.
So, how important is it to comply with these requirements? From a financial standpoint, a company may have to pay the employee their rate of pay x 8 hours per day until the wages are paid. Waiting an additional 7 business days to pay a worker that makes $20.00/hour could cost you $1,120.
To make sure you are in compliance, train supervisors and managers of these laws and update documentation to ensure that these laws are properly reflected in your policies and procedures. For multi-state employers, check every state law to review requirements to ensure your company is complying.