Paying a Deceased Employees’ Unpaid Wages

California Law doesn’t have a specific law that addresses the way the employers are supposed to handle the final paychecks of a deceased employee. As there is an absence of specific law to address this specific issue, it should be treated the same way as treating the employees who voluntarily terminate their employment without any prior notice. Employers are usually in a difficult position as they are confronted with so many legal questions about the deceased employees’ wages.

How to Pay the Unpaid Wages?

Employers need to inquire about the deceased employee’s family or the deceased’s estate. If the estate is the one probated, then the employer can issue the final check to the estate. But in most of the cases, a probate is not needed and the person(s) who is entitled to receive the paycheck of the deceased employee can claim the wages. The person who claims the wages should furnish an Affidavit of the small estate to the employer of the deceased.

Once the claim is resolved and the person to receive the paycheck is identified, there is another question about the taxes. Accrued wages, vacation pay, and other compensation paid after the death of the employee must be reported. Social security and Medicare taxes can be withheld from the payment. It can be reported in the employee’s form W-2 to ensure that proper credit is received. Also, the employer must report the payment to the estate or to the beneficiary in the form 1099-MISC.

To make it easier, here’s a list of things to be done by the employer.

Employers should

  • Issue the final paychecks either to the estate of the deceased employee or to the beneficiary
  • Locate the designations of the beneficiary as quick as possible
  • Set a time and discuss all the benefits that the beneficiaries are eligible for and introduce them to the process of getting the claims
  • Act in accordance with the California laws and include accrued but unused vacation, sick leave in the payment
  • Terminate the health insurance as of the date of death of the employee
  • The checklist for normal termination of an employee needs to be followed to return all items belonging to the employee.