Can Employees Be Required to Sign a Release To Get Their Final Paycheck?

Q: I was terminated from work and my employer told me to sign a “termination form” and a “release.” I was told that I would not get my final paycheck if I do not sign these documents. Is this legal?

A: If you were discharged from work, the employer must immediately pay all compensation due to you at the time of termination. Wages include any earned and unused vacation pay. The employer should pay you “at the place of discharge.”

An employer shall not require the employee to sign a release of the employee's right 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 termination form. This conduct is prohibited by law.

The employer also cannot require the discharged employee, as a condition of being paid, to execute a statement of the hours he or she 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 violate this provision.

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 the termination, 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 paying the terminated employee on time.

Penalties may be avoided if the employer can show that a good-faith dispute existed concerning whether any wages were due. A “good-faith” dispute means that the employer's defense, based on law or fact, if successful, would preclude any recovery on the part of the employee.

If an employee quit or resigned from work without giving notice, the employer must pay all compensation due within 72 hours of the resignation. If the employee gave more than 72 hours' notice of the resignation, then all compensation due must be paid on the last day of the employee's work.

 An employee who gives prior notice before quitting must be paid at the office or agency of the employer in the county where the employee worked. An employee who quits without 72 hours' notice may request that his or her final wage payment be mailed to a designated address.

There may be situations when an employee, who is asked to leave, may have some claims against the employer. The claims may include additional wages, discrimination, or harassment. An employer who recognizes these potential claims may offer the employee additional money in exchange for signing a release. In this instance, the employee is well advised to consult with a knowledgeable employment attorney before signing the release or any document with the employer.

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