Payment of Wages Upon Termination
Upon termination from employment, employees frequently have questions regarding their final payment of wages. This guide seeks to answer the most commonly asked questions.
When must an employer pay final wages?Under the Arizona's Wage Payment statute, A.R.S. 23-350, et seq., employers must pay an employee upon separation of employment. Employees who are fired, discharged, terminated or permanently laid off are to be paid all wages within seven (7) business days of the discharge or by the next regular payday, whichever comes first. A.R.S. 23-353. When an employee voluntarily leaves or quits, the employer must pay all wages due by the next regular payday. The employee can request the wages be paid by mail. Id.
What does "wages" include?Wages include non discretionary compensation. Employers are required to timely pay former employees everything they are owed, including wages, earned commissions, earned bonuses, and other agreed upon amounts. Depending on company policies and other factors, the employer could also owe unused PTO, vacation pay and/or and even severance pay. Always check the employment handbook!
RemediesWrongfully withholding earned wages may result in serious consequences. We recommend that an employee who has not been timely paid promptly send a written request for payment, seeking an explanation for the failure to pay the agreed upon compensation. Giving the employer an opportunity to provide a written explanation can demonstrate lack of good faith helping to establish grounds for treble damages, or three times the unpaid wages. If your former employer fails to respond, that too will tend to show bad faith. A letter may also allow an employer to clarify why the wages are not owed (if the employee handbook states, for example accrued time is forfeited upon termination) or to correct a mistake in its calculations, and resolve the matter. Keep a copy of the request and any response. Do not delay as an employee only has one year in which to bring a claim for unpaid compensation and/or breach of an employment contract. If it still is not resolved, depending on the amount at stake, you may want to contact counsel and evaluate whether to file a lawsuit for treble damages or to contact the Department of Labor Wage and Hour Division which handles unpaid wage claims less than $5,000.