February 26, 2019 | Category: Compliance
organizational behavior

An employer’s obligations under the law do not go away just because an employee does. Whether the employee has left the company or has “ghosted” you while still on the payroll, your obligations as an employer do not change.

Final Paycheck Requirements

Federal law provides no guidance on how or when a final paycheck must be issued. Most states provide some sort of guidance, but it varies greatly state to state. Employers who operate in multiple states will want to ensure they are in compliance with the requirements of each state in which they operate.

Nevada law regarding when employers must provide a final paycheck depends on whether the employee resigns from employment or is terminated.

When an employee resigns or quits employment, ideally he or she has provided sufficient notice of his or her departure. Even if the employee does not, the requirements under the law are the same. NRS 608.030 requires that employers pay all wages and compensation earned and unpaid at the time of the employee’s resignation no later than the next regularly scheduled pay day or seven (7) days after the employee resigns, whichever occurs first.

When an employee is terminated, all wages and compensation earned and unpaid at the time of discharge are due and payable immediately. See NRS 608.020. We always advise employers who intend to terminate an employee to have the final paycheck ready and provide it to the employee at the time of discharge. This complies with the law, but also avoids some of the issues discussed later.

Providing the paycheck at the time of discharge is not always possible. NRS 608.040 allows employers three (3) days to provide a discharged employee with wages and compensation due before penalties apply. After those three days, penalties totaling a full day’s pay continue until the employee is paid, up to 30 days.

It is always recommended that employers provide the employee his or her final paycheck using its usual method of delivery. Therefore, if the employee has been receiving his or her check by direct deposit, that same method should be used for the final paycheck.

If, however, your normal method of delivery isn’t feasible, you can mail the final paycheck to the last known address of the employee. We always recommend, if an employer is going to mail the final paycheck, to use a method of mailing that provides proof of delivery.

There are two reasons for this. First, it provides the employer with proof of the date that the final paycheck was made available to the employee. This shows compliance with the laws referenced above. Second, it helps to negate any allegations that the final paycheck was never received.

So, what do you do if you comply with the final paycheck requirements, but the check is returned to you as undeliverable?

Ensure that the final paycheck was addressed properly. If not, correct the mistake and re-send the final paycheck using the same method. If the address is correct and you do not have a forwarding address, contact the employee by other means (email, phone, etc.) to get the necessary information to send him or her the final paycheck or to inform the employee how he or she can collect the final paycheck.

Keep all records related to the mailing of the final paycheck in case there is ever an allegation that the final paycheck was not provided timely in compliance with the law.

If the final paycheck is undeliverable and you are unable to make contact with the employee by other means, hold onto the paycheck and keep it available for the employee. If the paycheck is never claimed, state law will govern what happens to the paycheck.

Nevada law provides that employees who avoid payment or refuses to accept the final paycheck as tendered cannot receive penalties for the time spent avoiding or refusing payment. See NRS 608.040.

W-2 Forms

Federal law requires that employers provide employees with the prior year’s W-2 statement by January 31st to use in filing their income tax returns.

What happens if that W-2 statement is returned as undeliverable? If it is a current employee, the solution is an easy one. If the employee is no longer with the company, the solution is a little more complicated.

Like with the returned final paycheck, make sure the address where you mailed the W-2 is correct. If the address is correct, employers should contact the employee by other means to get an updated address or make other arrangements to get it to the employee.

Any W-2 that is returned as undeliverable should be kept unopened as the sealed and stamped envelope serves as proof that the employer attempted to deliver the W-2 timely and in compliance with the law.

Every effort should be made (and documented) to contact the employee to ensure he or she receives the W-2 timely. The penalties for failing to provide employees with their W-2 forms by January 31 can be substantial. The only way to avoid these substantial penalties is to show reasonable cause for the failure.