Final Paycheck Laws in Ohio
When are Employers in Ohio Required to Pay Final Paychecks to their Terminated Employees? Answering this question requires an understanding of the Ohio state law governing payment of wages. As you will see while reading this article, applying the Ohio state law on the issue of disbursing final paychecks to terminated employees is not as straightforward as it sounds.This article seeks to guide employers and employees within the State of Ohio on the issue of final wages to terminated employees.
What are the Rules on Final Paychecks Under Ohio Law?
There is no federal law which requires an employer to immediately pay terminated employees. The timing of providing paychecks is a matter of state law, and in some states, immediate payment of paychecks to terminated employees is a statutory requirement. However, this is not the case in Ohio. In fact, there is no explicit provision under Ohio state law that governs the payment of an employee’s final paycheck. Therefore, we must examine the existing rules on disbursing payments and interpret it accordingly.
What Final Paycheck Law in Ohio Provides
Ohio Rev. Code §4113.15 is the all-encompassing state law that governs final payments for terminated employees in Ohio. This law lays out a two-pronged rule: the first prong provides general rules on when paychecks are required to be given to employees, and the second prong imposes a penalty on employers who do not comply with the rules.
The First Prong
Subsection A of Ohio Rev. Code §4113.15 provides that:
“Every individual, firm, partnership, association, or corporation doing business in this state shall, on or before the first day of each month, pay all its employees the wages earned by them during the first half of the preceding month ending with the fifteenth day thereof, and shall, on or before the fifteenth day of each month, pay such employees the wages earned by them during the last half of the preceding calendar month.”
The foregoing rule on Ohio termination pay laws provides two pay periods as to when paychecks are required to be paid, broken down in the following manner:
- For wages that were earned during the first half of the current month, the paycheck shall be paid on or before the first day of the subsequent month.
- For wages that were earned during the second half of the current month, the paycheck shall be paid on or before the fifteenth day of the subsequent month.
Jane, who worked for her employer for the month of January 2021, shall be paid as follows:
- For Jane’s wages earned from January 1 to January 15, her paycheck shall be given to her on or before February 1.
- For Jane’s wages earned from January 16 to January 31, her paycheck shall be given to her on or before February 15.
However, these rules do not prevent employers from setting a specific regularly scheduled payday, so long as the scheduled payday does not go beyond the required deadline for payment.
The Second Prong
The final paycheck laws by Ohio state, specifically Subsection B of Ohio Rev. Code §4113.15, provide that an employer shall also be required to pay employees liquidated damages on top of the employee’s regular pay for unlawful withholding of an employee’s paycheck after they are terminated. Applying this rule, using Jane’s example, her employer will be required to pay liquidated damages under the following scenarios:
- The regular scheduled payday in Jane’s place of work requires her to be paid on February 1 for wages earned from January 1 to January 15, and such wages remain unpaid on March 4 or onwards. Note: 30 days counted from February 1 is March 3, so 30 days beyond that begins on March 4.
- The regular scheduled payday in Jane’s place of work requires her to be paid on February 15 for wages earned from January 16 to January 31, and such wages remain unpaid on March 18 or onwards. Note: 30 days counted from February 15 is March 17, so 30 days beyond that starts on March 18.
- If there are no regularly scheduled paydays in Jane’s place of work, the question of whether the wages remain unpaid or not will depend on when Jane formally filed a claim for her wages. If the employer fails to provide Jane with the final paychecks beyond the period of 60 days from when the claim was filed they will be faced with the additional consequences.
In terms of the amount of liquidated damages, the law sets it at the lower amount of: (1) six percent (6%) of the amount of unpaid wages; or (2) a fixed amount of two hundred dollars ($200).
Applying the General Rules to Final Paychecks
Considering all these rules, how do we apply Ohio Rev. Code §4113.15 in cases of final payment to terminated employees?
The best interpretation is to apply Subsection A of Ohio Rev. Code §4113.15 by analogy and to use the terminated employee’s last official day of work as a reckoning point. Under this view, the terminated employee’s final paycheck is due on the first regularly scheduled payday following the last day of employment. However, if there is no regularly scheduled payday, the terminated employee’s final paycheck will need to be paid depending on the specific wages the final paycheck pertains to.
For example, Jane was terminated on January 20:
- If there is a regularly scheduled payday in Jane’s place of employment, her final paycheck shall be due on the next regularly scheduled payday after January 20.
- If there is no regularly scheduled payday in Jane’s place of employment, her final paycheck shall be due at two separate times:
- For Jane’s wages earned from January 1 to January 15, her final paycheck shall be due on or before February 1.
- For Jane’s wages earned from January 16 to January 20, her final paycheck shall be given to her on or before February 15.
Moreover, applying Subsection B of Ohio Rev. Code §4113.15 by analogy, but still using the terminated employee’s last official day of work as reckoning point, the terminated employee shall be entitled to liquidated damages if his or her final paycheck is not paid within the prescribed periods discussed above.
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While there is no true Ohio last paycheck law, and no explicit rules under Ohio state law governing final paychecks, what is clear is that employers are obligated to immediately pay a terminated employee within the prescribed period of time. The only question that the Ohio final paycheck law leaves unanswered is the timing of the payment of final paychecks. Notwithstanding the law’s silence on the matter, it is reasonable to presume that the law did not intend to leave terminated employees in limbo while freeing employers from liability for failing to pay terminated employees within a reasonable amount of time. Otherwise, an injustice will be committed against terminated employees who deserve to be paid for their honest work. If you find yourself in the unfortunate situation where an employer is withholding your wages, it’s a good idea to contact a lawyer to ensure you get the compensation you deserve.