Human Resource Blog

FINAL PAYCHECK INCLUDES ALL HOURS WORKED, VACATION AND SICK (CALIFORNIA)

	Compensation
Employee Payroll Action Form W-4 Employee Withholding Allowance Cert. Employee Payroll Status/Change Form Direct Deposit Form Total Compensation Summary

I GAVE MY EMPLOYER A LETTER OF TWO WEEKS’ TERMINATION NOTICE. AT THE END OF MY WORKDAY, HR AND MY SUPERVISOR STATED THAT IT WAS DECIDED I COULD LEAVE WORK NOW AND STILL BE PAID FOR THE TWO WEEKS NOTICE I GAVE WITHOUT HAVING TO GO TO WORK. THE FINAL PAYCHECK I RECEIVED INCLUDED ALL HOURS WORKED FOR THE PAST TWO WEEKS, THE TWO WEEKS I DID NOT HAVE TO WORK (THOUGH I OFFERED) AND MY EARNED VACATION AND UNUSED SICK HOURS. WITH ALL HOURS TOGETHER IN ONE CHECK, THE TAX DEDUCTION WAS A BIGGER AMOUNT THAN IF I HAD BEEN PAID SEPARATE CHECKS. I REQUESTED TO HAVE MY HOURS WORKED SEPARATED FROM VACATION AND SICK ON THE PAYCHECKS BUT THEY SAID IT WAS COMPANY POLICY. I ASKED WHERE DOES IT SAY THAT AND THEY AVOIDED THE QUESTION AND REFUSED TO SAY WHERE. CAN THEY DO THAT?

Yes, they can do that. In fact, they should do that. You’re very fortunate in that the employer paid you for two additional weeks that you did not work, plus your sick time. California law does not require them to do so (although it does require the employer to pay vacation and PTO time.) Under federal law, bonuses are taxed at a higher rate than ordinary payroll. And, severance pay — which is what you received — is considered a bonus. Therefore, the employer withheld an appropriate amount. At the end of the year, if you overpaid taxes, you will receive a refund for the excess withheld. But it’s not at the employer’s discretion whether to tax bonuses at a higher than normal rate or not — that’s federal law.