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Always Immediately Pay Terminated Employee Wages

Always Immediately Pay Terminated Employee Wages
Pat Dickson - Fri May 04, 2012 @ 10:43AM
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If you are an employer in Arizona and you fire or lay off an employee, pay her all unpaid wages before she leaves the building. Have her check ready to deliver with her pink slip. If you can't get a check in her hands before she is gone, do everything you can to pay her (and document your efforts to pay her) before the close of business, on the very day of termination.

The above is my rule, whenever I'm in charge of layoffs or firing in Arizona, and it is stricter than Arizona Law requires, but not by much. The real rule is you must pay your employees within three (3) working days, or by the end of the next pay day, whichever is sooner, but my position is why wait? If you are still not conviced, let me tell you why I take this approach:

By Arizona Law, if you don't pay your discharged employee on a timely basis, she can sue you for treble damages. This means if you owe her $500 in wages when you dismiss her, and you don't pay her in a legally timely manner, then she can sue you for $1500. Don't forget, you may have to hire and pay a lawyer, and his fees could be around $1000. Your total exposure becomes $2500 for a $500 wage obligation! If you think it isn't easy for her to sue you, don't forget she doesn't have to take you to court. She can file an action with the Department of Labor against you, which is a lot easier and cheaper than court, at least for her! And the Department of Labor, in my experience, is not always on the employer's side. This is why, just from a cost perspective, it is my preference to take a very risk averse approach. Pay discharged employees immediately! Act fast! $2500 is a lot more than $500!

Here is the law from the Arizona State Legislature site (Read Chapter 2, Article 7, Payment of Wages):

http://www.azleg.gov/arizonarevisedstatutes.asp?title=23

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