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Final
Pay
Tommy Simmons
TEXAS WORKFORCE COMMISSION
Paul Pauken
CHAIRMAN
Final pay
The Texas Payday Law controls how an employee is paid after they leave the company. The deadline for the final wage payment depends upon the type of work separation. If an employee is laid off, discharged, fired, or otherwise involuntarily separated from employment,
the final pay is due within six (6) calendar days of
discharge; if the sixth day falls on a day that the employer is not normally open, the deadline is extended to the next working day. If the employee quits, retires, resigns, or otherwise leaves employment voluntarily, the final pay is due on the next regularly-scheduled payday following the effective date of resignation. “Mutual agreement” separations are generally regarded as involuntary.
Final pay for commissions and bonuses
The final commission or bonus payment depends upon the terms of the commission or bonus agreement. In enforcing the Texas Payday Law, TWC will apply the terms of whatever agreement existed, so it is important to ensure that the commission or bonus agreement be exactly what the company intends. A good agreement will be in writing and clearly set forth the requirements for earning such pay, whether the commission or bonus is forfeited if the employee is no longer employed when it is payable, and finally the time interval for the payment.
Severance pay
Severance pay that is promised in a written policy or other form of agreement is an enforceable part of the wage agreement under the Texas Payday Law. Under TWC rules, severance pay is additional pay for an employee’s past work that is given at the end of the employee’s employment, and is usually, but not always, based upon a set formula such as length of prior service. It is a payment that the employer has somehow previously obligated itself to give, either orally or in writing. Only a written severance pay obligation is enforceable under the Texas Payday Law. It is not the same as wages in lieu of notice, which is a post-termination payment that the employer has never previously obligated itself to give.
TWC’s Labor Law Department will enforce whatever severance payment interval and conditions are set forth in the written policy or agreement creating the obligation to make the payment. For example, if the severance payment is payable 30 days following the date of termination, that is what will be enforced by TWC.
Final pay for a deceased employee
In the case of a deceased employee, the employer should deliver the final paycheck only to the executor or the administrator of the employee’s estate, and then only upon presentment of a copy of the letters testamentary issued by the probate court. Otherwise, the employer could potentially end up paying twice, once to the person who received the pay without proper legal clearance, and again to the authorized representative of the estate.
Unclaimed wages
Unclaimed and abandoned property reverts or “escheats” to the state after the passage of a certain interval of time, depending upon the type of property involved. The state then holds the property in trust for the property owner. In the case of unclaimed wages, the interval of time is one year (see Texas Property Code � 72.1015). Thus, the employer should hold an unclaimed paycheck for one year, then contact the Unclaimed Property Division of the Texas State Comptroller’s Office for instructions on disposition of the wages (the web site is
www.window.state.tx.us/up/).
Keeping the above in mind should make a real difference in how UI cases turn out. My office stands ready to help employers in any way possible under the law.
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