Over the weekend, one of our employees passed away. How do we handle his final paycheck?
The death of an employee can cause emotional and operational upheaval in the workplace. In addition, employers must manage certain administrative issues, including handling the employee’s final pay.
Disbursing the employee’s final pay depends on several factors, including whether the employee has a surviving spouse or registered domestic partner, the amount of net wages owed to the employee, whether a probate case has been opened, whether the employee had a will or trust in place, and the size of the employee’s estate.
Married/Domestic Partner
If your employee was married or had a registered domestic partner, you may release your deceased employee’s final pay, including any accrued, unused vacation time, to the employee’s spouse/registered domestic partner.
To do so, the employee’s surviving spouse/registered domestic partner must complete an affidavit under penalty of perjury as to their identity, the date and location of the employee’s death, and the lack of a probate case for the deceased employee’s estate.
Because certain technical rules must be adhered to in the required affidavit, CalChamber has created a Deceased Employee Compensation Collection Form.
An important exception to the above arises if the employee’s final pay is more than $20,875 net. In that case, an employer may not release the final pay to the employee’s surviving spouse/registered domestic partner. (Please note: $20,875 is current as of April 1, 2025. That amount is increased every three years based on the Consumer Price Index.)
Unmarried/No Domestic Partner
If the employee was unmarried and did not have a registered domestic partner, several scenarios are possible.
If the deceased employee had a will or trust, the executor of the deceased employee’s estate will contact you with instructions for the disbursement of the employee’s final pay. You will then disburse the funds in accordance with the directions of the executor of the estate.
Small Estate
If your employee died without a will or trust, you may disburse the employee’s final pay to the employee’s heirs (as determined by California intestate law) if:
- The value of the employee’s estate, excluding real property, totals less than $208,850 (Please note: $208,850 is current as of April 1, 2025. That amount is increased every three years based on the Consumer Price Index.);
- At least 40 days have passed since the employee died; and
- If all the potential heirs to the employee’s estate sign affidavits, pursuant to California Probate Code, Section 13100 et seq., that they are the only potential heirs and they are directing you, the employer, to make payment of the deceased employee’s final wages.
Larger Estate
If the value of your employee’s estate is greater than the threshold for a small estate, you will make the employee’s final wages payable to the Estate of [Deceased Employee’s Name]. This can be deposited with the clerk of the court for the county in which the probate case was filed.
If No Contact
In a situation where your employee died without a spouse or registered domestic partner and you are not contacted by any heirs or executors of the employee’s estate, you will contact the Office of the Labor Commissioner and make payment of the employee’s final wages to that office for disbursement to lawful heirs, should they make a claim in the future.
Column based on questions asked by callers on the Labor Law Helpline, a service to California Chamber of Commerce preferred members and above. For expert explanations of labor laws and Cal/OSHA regulations, not legal counsel for specific situations, call (800) 348-2262 or submit your question at www.hrcalifornia.com.
