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Small Business Guide

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Paying Terminated Employees

When employment terminates, there are certain things you'll have to take care of, including issuing the employee's last paycheck. If possible, it's best to give the check to the employee on the last day of employment. In some cases (for instance, when you fire an employee), you may not have enough time to prepare the paycheck before the employee leaves. In that event, you should get the check to the employee as soon as possible.

Work Smart

Work Smart

When preparing an employee's final check, be sure to take out all appropriate deductions and to reduce pay by the amount of time not worked in that week, unless the employee is exempt and absences are less than a day's length in duration.

Also make sure that you don't deduct premiums for benefits if premiums are paid in advance. If the employee wants to continue benefits, he or she can do so under COBRA.

State laws. Some state laws require that you get the employee's last paycheck to him or her within a certain number of days. Click on your state on the map below to see what your state requires. States that are blue have no provisions for termination pay.

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