Top Ten Tips Disclaimer
Delivery of wages is fairly flexible. Wages can be given in person to an employee, mailed to a designated address (in time to be received on the payday), deposited electronically into an account (direct deposit), given to a third party who has been authorized by the employee in writing to receive the employee's paycheck, or paid in any other way to which the employee has agreed in writing.
There are some pitfalls, to be sure. For instance, payment of wages by EFT (electronic funds transfer, or direct deposit) involves prior arrangements and paperwork with a bank and is subject to federal and state rules. If the employee receives part or all of the wages "in kind" (in a form other than cash or negotiable money order or check), the employee has to have authorized that in writing in advance of the payment.
Although pay receipts or check stubs, otherwise known as "written statements of earnings", are not required for employees covered by the federal law known as the Fair Labor Standards Act (see sections 62.003 and 62.151 of the Texas Minimum Wage Act - the latter section exempts FLSA-covered employees from the Texas minimum wage laws, including the earning statement provision), it is nonetheless a very good idea to give employees such receipts or check stubs. For one thing, a receipt or check stub can help serve as one of the kinds of wage and hour records required under the FLSA's recordkeeping requirements. For another, giving employees proof of how their wages were computed, including deductions from wages, can help minimize complaints and suspicions on the part of employees about whether their wages were properly paid. The statement of earnings may be in either written or electronic form. If sent via e-mail, consider using some form of password protection and/or encryption, since privacy and identity theft issues are becoming more critical all the time. If sent via regular mail, keep the recent law in mind that requires employers to give employees an annual reminder that they have the right to request the company not to print their Social Security number on any document sent through the mail (section 501.001(b) of the Texas Business & Commerce Code). Concerning cash wages, an employer should simply never, ever give wages in cash without at least getting a signed receipt from the employee showing that a certain amount of wages was paid in cash on a certain date. Failing to keep such documentation can expose an employer to a claim that wages were not paid at all.
Special Wage Delivery Problems - Deceased Employee and Unclaimed Wages
1. Deceased Employee
Properly paying final wages for a deceased employee requires recognition of the fact that under state law, the death of a person creates a legal entity that stands in place of the person - that entity is the "estate" of the deceased person. Texas probate law provides that an estate is represented by an executor in the case that a valid will exists, or by a court-appointed administrator if no will exists. The final pay for a deceased employee is the property of the deceased person's estate, and the one who is authorized to receive that property on behalf of the estate is the executor or the administrator. Thus, the final pay would go to the legal representative of the deceased employee's estate.* The probate court will issue letters testamentary to an executor, and letters of administration to a court-appointed administrator (see Section 178 of the Texas Probate Code at http://www.statutes.legis.state.tx.us/Docs/PB/htm/PB.VII.htm#178). If an employer has a final paycheck to deliver and is presented with a copy of such a letter, it should confirm the person's identity, deliver the wages to that person, get the person to sign a receipt for the wages, and keep a copy of the letter for the ex-employee's payroll records. For the special case of a deceased employee who was married at the time of death, the payment may be made to the surviving spouse if that person presents a suitable affidavit that no executor or administrator has been appointed (see Probate Code Section 160 at http://www.statutes.legis.state.tx.us/Docs/PB/htm/PB.VI.htm#160). If the spouse later turns out to not be entitled to receive the wages, he or she will be personally liable to the executor or administrator for the amount in question.
* If the agreed-upon method of wage delivery is by mail, some employers simply mail the final paycheck to the deceased employee's address of record as usual and let whoever handles the mail for the deceased employee take care of ensuring that the final paycheck is properly handled. The problem with that method is twofold: 1) sometimes, people claim never to have received the check, and the employer is left in the uncomfortable position of not knowing whether to pay for a stop payment order on the paycheck and reissue it; and 2) more seriously, the person who handles the mail for the deceased employee, at least initially, may be someone who turns out to be unauthorized to receive or handle property of the estate, and the executor or administrator can hold the employer responsible for any diversion of the wages that might occur. That is why the best advice is to hold the final paycheck for an authorized representative of the employee's estate and to get a signed receipt upon delivery.
2. Unclaimed Wages
Unclaimed and abandoned property reverts or "escheats" to the state after the passage of a certain interval of time, depending upon the type of property involved. The state then holds the property in trust for the property owner. In the case of unclaimed wages, the interval of time is one year (see Texas Property Code § 72.1015). Thus, the employer should hold an unclaimed paycheck for one year, and then contact the Unclaimed Property Division of the Texas State Comptroller's Office for instructions on disposition of the wages (the Web site is www.window.state.tx.us/up/).
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