Q: I was fired from work last week and another co-worker also quit at around the same time. Our employer told us both to sign an “exit form” and a “release.” We were told that we would not get our final paycheck if we do not sign these documents. Is this legal?
A: If an employee was discharged (i.e., fired or terminated) from work, the employer must immediately pay all compensation due at the time of termination. Wages include any earned and unused vacation pay. The employer should pay the employee “at the place of discharge.”
If the employee resigned (i.e. quit) from work, the employer must pay all compensation due to the employee within 72 hours of the resignation. An employee who resigned without 72 hours' notice may generally request that their final wages be mailed to a designated address. If the employee gave more than 72 hours notice of resignation, then all compensation due to the employee must be paid on the employee's last day of work at the location where the employee worked.
An employer shall not require the employee to sign a release of the employee's rights to any wages that are due and earned by the employee unless those wages have been paid. Some employers hold their employee's final paycheck “hostage” until the employee signs a release or some type of employment separation form that contains a release. This conduct is prohibited by law.
The employer also cannot require an employee, as a condition of being paid, to execute a statement of the hours they worked during a pay period, which the employer knows to be false. A release signed by the employee under these circumstances may not be enforced. It may be a misdemeanor for an employer to engage in this unlawful conduct.
The employer has the obligation to make sure that the employee receives their payment. If the employer says it will mail the employee's paycheck, the employee must consent to such an arrangement. If the employer sent the final paycheck by mail without the employee's consent, and the check was not received, it is considered that no payment has been made. The employee may also authorize the employer to pay the wages into the employee's bank account
Even if there is a dispute regarding the amount due to the employee, the employer must pay, without requiring a release, whatever wages are due and not in dispute.
If an employer willfully fails to pay all wages due to an employee after their separation from employment, the employee's wages continue as a penalty until paid, for up to 30 calendar days. This is called “waiting time penalties.” Hence, if the employee is regularly paid $120 per day, the employer may be held liable to pay up to $3,600 in penalty for not promptly paying the employee who was fired or who resigned.
Some employees may be thinking about signing a release to get their money right away. However, before they sign anything, they must ask themselves the following questions:
- Has the employer paid all hours worked by the employee, including overtime?
- Has the employer paid the employee for meal or rest breaks that were not provided to the employee?
- If the employee is entitled to vacation, has the unused vacation been paid?
- Was the employee fired for a potentially discriminatory or retaliatory reason?
- Does the employee have any other concerns regarding their wages or other aspects of their work during their employment?
If the employee answers ‘yes' or even ‘maybe' to any of the above, the employee would be smart to consult with an experienced employment attorney before signing any release or termination-related document with the employer.