by Frank J. Godfrey III
Every employment arrangement comes to an end eventually. It is therefore important for employers to comply with the law regarding timely payment of final wages in order to avoid wage claims from their former employees.
Wage claims can expose unwitting Oregon employers to unnecessary and costly liability risk. Statutory penalties can amount to the equivalent of 30 days’ pay. Successful wage claim plaintiffs can recover their attorney fees and costs. Unfortunately, Oregon employers who successfully defend wage claims cannot, absent extreme circumstances, recover their attorney fees.
Moreover, Oregon’s wage claim statutes favor employees. Adding to the frustration is the fact that the wages at issue are significantly less than an employer’s liability exposure to penalties, attorney fees and the personal time devoted to defending the claim. For these reasons, a cost benefit analysis most always dictates that an Oregon employer resolve wage claim disputes as promptly as possible no matter the facts. Containing liability exposure is the overriding concern.
Oregon law provides guidance on when employers must provide final paychecks to employees who quit or are terminated. Employers should be aware of the following:
- When an employee quits without providing the employer at least two days’ notice (48 hours), their final paycheck is due within five days, excluding weekends and holidays, or on their next regularly scheduled payday, whichever comes first.
- When an employee quits and provides the employer at least two days’ notice (48 hours), their final paycheck is due on their last day of work. If the employee’s last day worked falls on a weekend or holiday, their final paycheck is due on the next business day.
- When an employer terminates an employee, the terminated employee’s final paycheck is due no later than the end of the business day that follows the terminated employee’s last day worked.
- Likewise, when an employer and employee mutually agree to terminate the working relationship, the employee’s final paycheck is due no later than the end of the business day that follows the employee’s last day worked.
To avoid liability exposure, employers should make sure they understand all manner of wage and hour law including payment of final wages. Good pay procedures and practices help employers reduce their wage claim liability risks. When possible, provide the departing employee their final wages on their last day worked. This is a best practice that goes a long way toward containing liability exposure and cleanly ending the employment relationship. And if you have any questions, call your attorney.