Final Pay Checks for Remote Employees in California

Many employers have remote employees who work from their homes, often hundreds of miles from the company’s physical operation. Technology has made remote work so seamless that you may barely notice the distance. However, when the employment relationship ends for remote workers in California, the State has strict rules on when, where, and how employers must provide final paychecks! Make sure you know the rules on final checks for remote employees to avoid costly penalties.

Time and Place of Final Payment

Final paychecks must include all wages earned, up to and including the last day worked, as well as earned and unused vacation or PTO.  The deadline to provide the final paycheck depends on who initiates the separation of employment, as outlined below.

For Voluntary Resignations (Employee Initiates):

• Time: Depends on how much notice the employee gives:
  • When an employee gives at least 72 hours’ notice that they are resigning, employers are required to have their final paycheck ready for them on their last day of work.
  • If the employee provides less than 72 hours’ notice, employers must provide their paycheck within 72 hours (clock hours, not business days) from the time of notice.
• Place: An employee who resigns must be paid at the office or agency of the employer in the county where the employee has been performing labor.
  • Mailing is an option for an employee who resigns with less than 72 hours’ notice, and only if the employee requests payment by mail and designates a mailing address. The check needs to be mailed within 72 hours of notice.

For Involuntary Terminations (Employer Initiates):

• Time: When the employer ends the relationship, regardless of the reason, the final paycheck must be provided at the time of termination (i.e., by the last day). Ideally, it should be handed to the employee at the time the termination decision is communicated to them.
• Place: Whenever you terminate an employee, the final paycheck must be provided at the place of termination.

Different requirements may apply for certain commission payments, expense reimbursements, temporary agencies, and some specific industries.

What Does This Mean for Remote Employees?

Getting these rules right may take some additional planning when it comes to remote employees.

• When an employee resigns, Direct Deposit is a good option, but only if the employee authorizes the direct deposit specifically for their final paycheck and if your payroll can have the correct amount deposited in the account and available to the employee within the required time frame.
  • What about when the employer initiates termination? The Labor Commissioner views any previous direct deposit agreement as void for the final check, so a separate agreement will be required. See below.
• Mailing the final paycheck is only recommended by the Labor Code when an employee resigns with fewer than 72 hours’ notice, requests you mail their final check, and provides you with an address.

Ideas for a Remote World

If an employee works remotely but lives near your headquarters, ask them to come in to receive their final check, just like an employee who regularly works on site. This allows them to return any company property, laptop, keys, etc.

For those employees who work remotely and don’t live anywhere near the office, another option is to overnight the final check and paperwork via certified mail, and then communicate the termination decision remotely (via phone call or Zoom, for example), ensuring the final check and paperwork are in hand at the time of termination. The final check should include pay for the employee’s last day, including when you communicate the decision. However, the Labor Commissioner has not addressed whether this option would be compliant, so it is a riskier choice than arranging the usual in-person meeting as you would for employees who regularly come into the workplace.

Making sure final pay is handled properly is a must for any employee, remote or otherwise. CEA members can use our Termination Checklist, Final Paycheck Fact Sheet, and Final Paycheck Worksheets for Exempt and Non-Exempt Employees, available on our HR Forms and Toolkits page.

Potential Penalties

There are many reasons for employers to make sure they get these rules right.  Penalties for failure to pay final wages on time include one day’s wages multiplied by the number of days the paycheck is late, up to a maximum of thirty (30) days. Additionally, California’s Labor Code provides that violation of the rules about the place of payment of final wages is a misdemeanor.