Is There a Federal Rule for Final Paychecks?
It may come as a surprise, but the federal government does not establish a specific deadline for when final paychecks must be issued. In practice, final paycheck timing is generally governed by state law, which is why employers should review the rules that apply in the state where the employee worked.

Arkansas Final Paycheck Rule
Arkansas does have a specific rule for discharged employees. If a company or corporation discharges an employee, unpaid wages are generally due by the next regular payday. If payment is still not made within seven days of that next regular payday, Arkansas law provides for a penalty.

Because final paycheck timing can create liability for employers, businesses should make every effort to pay all wages owed promptly and consistently under their normal payroll process.

Important Final Paycheck Considerations
Even when an employee is terminated, employers cannot withhold wages that have already been earned. A final paycheck should include all compensation due through the employee’s last day worked.

Employers should also review whether the employee is entitled to payment for accrued or unused vacation or PTO. Arkansas does not have a broad statewide rule that requires PTO payout in every situation, so payout often depends on the employer’s handbook, contract, or established policy.

If severance is being paid, it is generally treated as taxable wages for withholding purposes. Employers should also remember that Arkansas state income tax withholding still applies to taxable final wages when appropriate. The Arkansas Department of Finance and Administration announced updated withholding tables following the most recent tax cut, reflecting a top individual income tax rate of 3.9%.

Because final paycheck rules and payroll tax requirements can vary depending on the situation, employers should confirm the rules that apply to their business and workforce before processing a final check.

Estimate Only — Not Legal or Tax Advice
This article and the Arkansas final pay calculator are provided for informational purposes only and are intended to offer a general estimate of final pay and payroll tax withholdings. They should not be relied upon as tax, legal, or accounting advice.

Because payroll laws, withholding requirements, and employer obligations can vary based on the facts of each situation, employers should consult qualified professionals for final calculations and compliance guidance.

If you need help processing final paychecks or managing payroll compliance, the Beyond HCM team is here to help. Contact us to learn how our payroll solutions can simplify payroll processing and support your business.