Holding Final Paycheck

I'm familar with state laws regarding how quickly employers must
release final paychecks when an employee quits. Can we hold
paychecks beyond this period if an employee has not returned
all Company property (laptop computers etc.) or are we required
to release the final payment and pursue the Company property


  • 4 Comments sorted by Votes Date Added
  • You can get in a lot of trouble holding employees' paychecks. Usually, in the event of an employee having company property, the employee normally signs a waiver at the front end and when he accepts the company property that he will return it upon resignation. If he does not, then the amount will be deducted from his final pay. This is something the employee would have to sign off on.
    If you don't have this type of waiver,then I would pursue it separate and apart from the final paycheck.
  • All of the suggestions are fine, however, the part about signing an agreement to hold the check until return or reducing the check to cover the missing whatever will not work in California. These types of withholding are illegal and subject to up to 30 days pay in penalty.
  • Most states have provisions for when the final paycheck must be issued and in LA it is not permitted to withhold the final paycheck in exchange for the return of company property. We try to address this via a formal exit process on the final day of employment, but even this is not foolproof. When all else fails and the return of essential property doesn't occur, we inform the former employee that they have left the organization in "not good standing" status and if that doesn't stimulate anything, we will go to the court for assistance in issuing a temp restraining order for the return of the property.
  • Reactive Solution

    One other suggestion, but have HR handle it because it's tricky. Have HR call the employee and ask if he/she wants to come in and pick up their final check rather than waiting for it to be mailed to them. Most employees will say yes because they can have it pay day rather than wait for the mail. Then ask when they are coming by saying, "I want to make sure I'm here so that your check stays secure until you get here." When he/she tells you what time, then say "I'll make sure I've got your chack and I will expect you to turn in your lap top (or what ever) at that time so that all matters between you and the company are resolved." Make sure you're there. If he/she shows up without the equipment, you will have to turn over the check. But usually they will have it as they perceive this situation as a trade. If they do not have it, I would not miss the opportunity to tell him/her that the Company is going to begin proceedings to recover the value of the property and garnish any wages to satisfy that judgement. I have had employees bring in equipment a few days later to avoid the embarassment of being garnished at their new place of employment. Now the process takes months, but you don't have to tell everything you know!

    Proactive solution.
    I would begin including in your new hire packets a written authorization to deduct the value of the unreturnned equipment upon termination. Also, as you issue equipment, have employees sign an acknowledgement that they got this piece of equipment, that they are responsible for it keeping it repaired and in good working order, that it is worth $X and that they must return it upon termination or reimburse the Company.

    Hope this helps!

    Margaret Morford
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