When employees leave the workplace, many employers face concerns related to the legal obligations and offboarding responsibilities they have. As offboarding touches on various cornerstones of law and regulation, this article is intended to provide employers with an overview of key considerations regarding final pay, severance pay and security deposits under relevant Texas and federal law.
Final Pay and Timeline
Final pay is regulated by the Texas Payday Law, and the timing of this final pay will be dependent on the type of separation involved. An employee’s final pay includes regular wages, fringe benefits if applicable under a written policy and any other components of the pay. Certain pay components, such as commissions or bonuses, may follow a separate payout schedule if clearly defined in the written policy or agreement.
Employees who are discharged must be paid within six calendar days following their termination. However, if the employee quits, retires, resigns or leaves employment voluntarily, the final pay is due on the next regularly scheduled payday following the effective date of resignation. A mutual agreement to the separation in employment is generally considered involuntary, but would require a closer look into the details surrounding the events. More information about final pay can be found in the Texas Guidebook for Employers, available online at efte.twc.texas.gov.
Considerations About Severance Pay
When employees are laid off or have departed, certain employers grant severance pay based on the employee’s tenure at the company or other factors. Severance pay is an enforceable part of the wage agreement under the Texas Payday Law, and employers are expected to adhere to the written agreement entered into. In addition, wages in lieu of notice are optional and usually granted in exigent circumstances where notice cannot be given. As such, the Wage and Hour Department at TWC will enforce the payment and conditions that are set forth in the written policy or agreement. Additional information about severance pay is available in the Texas Guidebook for Employers at efte.twc.texas.gov.
