Termination pay is riddled with potential problems, as a recent federal district court case shows.
In Garcia v. Wal-Mart, an employee clocked in for work and a few minutes later was called into a meeting with his supervisor where he learned of his termination. He then left the premises, and his co-worker clocked him out an hour after he had arrived.
All told, the employee worked between 20 minutes and one hour on his last day.
To complicate matters, the company had a policy of issuing reporting time, typically four hours, on an employee’s termination date. Supervisors had some discretion with the amount.
The company argued it’d issued his final check accurately and on time. That paycheck included four hours of reporting time, his regular hours, and his overtime hours paid according to California’s daily OT rate.
However, the former employee’s lawsuit hinged on the fact that he received another check two weeks after his last day. That check amounted to $12.19 – one hour of regular earnings and 0.1 hour of accrued paid time off.
The court didn’t dismiss the case. Reason: The company couldn’t prove the former employee’s termination pay was based on the reporting time, as opposed to the clocked-in time.
Termination pay procedures
In your workplace, how well do supervisors understand your final pay procedures?
You may need to clarify if and when reporting time should be utilized on someone’s last day.
Need more information?
Payroll pros have numerous wage and hour laws requiring their attention. Acting too quickly can lead to costly errors and penalties for non-compliance. But looking for red flags can help.
Premier Learning Solutions is offering a workshop, Top 10 Payroll Mistakes and How to Prevent Them.
Available live and on-demand.
It covers topics such as:
- Practices to avoid termination errors
- How COVID can create additional mistakes and how to avoid them
- Properly taxing employees in a remote work environment
- Managing IRS substantiation for fringe benefits
- Examples on properly calculating employee overtime
Click here for registration and more information.