The last paycheck, and what else the employer holds

Why this is worth doing early

Final pay is not a large sum in most cases, but it is unusually reachable. Each of the 13 states read here has a route that bypasses probate, so this is often the first money a household can actually get to at exactly the point where funeral costs have landed and an income has stopped.

In Arizona the route closes once a personal representative is appointed. If probate is likely and there are wages owed, collect them first — the affidavit route requires that no application for appointment is pending or granted.^{Source 1}

Ask about more than the last few days' salary. Unused vacation is often the largest single item and is expressly included in California. Unreimbursed expenses count in Florida, which names travel expenses alongside wages. Commission, bonus and unpaid overtime are all worth asking about explicitly, because a payroll department will process what it is asked for and nothing else.

How to ask, and who to ask

1. Contact the payroll or HR department, not the person's manager. The manager cannot authorize it and the delay is usually spent finding that out.
2. Say what you are asking for by statute. "I am the surviving spouse and I am claiming the final wages under A.R.S. §14-3971(A)" gets a different conversation from "is there any money owed?" — particularly in Florida, where the employer is permitted rather than obliged and needs to be shown it may pay.
3. Ask what is owed in total, itemized: salary to the date of death, unused vacation, expenses, commission, bonus, unpaid overtime.
4. Ask separately what the employer holds that is not wages — group life insurance, a retirement plan, deferred compensation, stock, and any final health-cover election. These are separate claims with separate forms and often separate administrators.
5. Get the death certificate and your identification ready, and ask what form of affidavit they want. Some employers have their own; a plain affidavit reciting the statutory wording is normally accepted.

The employer's group life insurance is a separate matter from the wages and is usually the larger sum. It is paid to the named beneficiary and does not pass through the estate, so it does not wait for probate either — but nobody will mention it unless asked. Ask whether any employer-provided or voluntary life cover was in force, and who the administrator is.

The vacation balance is a separate question

Final pay and unused vacation travel together in practice and are governed separately in law. A family told that the last paycheck is being processed usually assumes the vacation balance is inside it. Whether it is depends on a rule that has nothing to do with the final-pay statute, and the states Sahvelo has read take five different positions — from a state where a forfeiture clause is void to one where the balance is not wages at all.

Wherever you are, ask for the written vacation policy rather than for the balance. In Texas and Michigan the policy is what creates the obligation, so the balance means nothing without it. In Illinois the policy tells you what was earned, and a forfeiture clause in it is unenforceable rather than a reason to stop. In New York the policy is the agreement the statute enforces. In North Carolina the question is not what the policy says but whether the employee was ever told it, so ask what was posted or handed over and when. In Pennsylvania the balance is wages and the policy is a detail. It is the same request in every state and it answers a different question in each — and it usually turns up the rest of what the employer holds at the same time.^{Source: Tex. Labor Code § 61.001 (Definitions) (opens in a new tab)•Source: 820 ILCS 115/5 (Illinois Wage Payment and Collection Act — payment of final compensation) (opens in a new tab)•Source: MCL 408.473 (Payment of fringe benefits; terms) (opens in a new tab)•Source: N.C.G.S. 95-25.13 (Notification, posting, and records) (opens in a new tab)•}

New York's carve-out is worth checking before relying on any of this, because it lands on exactly the employee whose accrued balance is largest. Somebody in a bona fide executive, administrative or professional role earning more than $1,300 a week is outside Labor Law §198-c altogether, and their claim to unused vacation rests on the contract alone.^{Source: N.Y. Labor Law § 198-c (Benefits or wage supplements) (opens in a new tab)•}

Sahvelo has read this rule for seven states — these six and California. The other six of the thirteen states covered for final pay are unread here: Arizona, Florida, New Jersey, Ohio, Virginia and Washington. Nothing about a state's final-pay route predicts its answer, and the two states that prove it are in the table above. Michigan has the strongest final-pay route in the whole comparison — no ceiling, mandatory, and open to a designee named before death — and the weakest rule on accrued leave. Pennsylvania's final-pay route is a permission capped at ten thousand dollars, and its accrued-leave rule is the strongest here. Where the balance is large enough to matter in an unread state, this is a specific question to put to an employment lawyer there, and it is a cheap one to answer because it turns on a single statute.

The group life insurance, and the clock the plan is on

Life cover held through work is usually the largest thing the employer holds, and it is the one kind of life insurance nobody comes looking for you about. The state acts that make insurers sweep the federal death file for unclaimed policies expressly exclude benefits provided under an employer's plan. If the beneficiary does not claim it, it sits.

What governs it instead is ERISA's claims procedure, and it gives a beneficiary a timetable most plans never mention. The plan has 90 days to decide the claim. It may take another 90, but only if it writes to you before the first 90 days are up, says what the special circumstances are, and gives the date it expects to decide. A claim that has simply gone quiet, with no extension letter, is being handled outside the rule.

Before the claim, ask for the plan documents in writing. That right belongs to beneficiaries as well as employees, the plan has 30 days to answer, and what arrives tells you what the policy actually says rather than what the plan has decided.

If the claim is refused

A denial has to be in writing and has to contain four things: the specific reasons, the specific plan provisions it rests on, a description of anything else that would perfect the claim and why it is needed, and the review procedure with its time limits — including a statement of the right to bring a civil action. The third is the useful one, and the one most often missing: the plan has to say what would make the claim payable.

You then have at least 60 days to appeal, the right to put written comments, documents and records in front of the reviewer, and the right to free copies of everything relevant to the claim on request. Ask for the file first and write the appeal second. The plan owes a decision on the appeal within 60 days, extendable once by 60 with advance written notice — or, where the decision belongs to a committee that meets quarterly, at the meeting after the request arrives.

Keep the dates. A plan that does not follow these procedures leaves the claimant deemed to have exhausted the plan's internal remedies, which removes the usual obstacle to going to court. Suing is rarely proportionate; naming the paragraph in a letter costs nothing and is generally what produces an answer.

The tax nobody withheld

Final pay is treated as income in respect of a decedent, and the practical consequence surprises families a year later: no federal income tax is withheld from it, and whoever receives it owes the tax on the whole amount. The money arrives clean and the bill comes later, on the return of the spouse or the estate that received it — not on the deceased person's final return.

It is also reported on a different form. Where the amount is $600 or more the employer reports it in box 3 of Form 1099-MISC, so a family reconstructing the year from wage statements alone will not see it at all.

Set aside a share of the final paycheck for tax. Nobody has withheld any.

Employment taxes split on the calendar. Paid in the calendar year of the death, the wages still carry social security and Medicare withholding, which goes on the deceased person's Form W-2 — while the wages themselves are deliberately kept out of box 1. Paid in a later year, nothing is withheld at all. So a W-2 showing social security wages and an empty box 1 is correct rather than an error.

Deferred compensation is a third pattern again. A distribution from a nonqualified pension or deferred compensation plan to a beneficiary or an estate is not wages: it comes on a Form 1099-R, like a pension. Asking the employer to add it to the W-2 is asking for the wrong document.