Question: One of our employees recently passed away. How should a California employer handle the employee’s final pay, including any accrued vacation?
Answer: The employer’s first step is to determine who has legal authority to receive the deceased employee’s final wages. California law does not allow an employer to simply hand the paycheck to the person who calls first, even when that person is a close family member.
The death of an employee is a difficult event for coworkers and management alike. In addition to responding with care and compassion, employers must also address the obligation to pay all wages owed through the date of death. Final pay generally includes earned wages earned up to the last day of employment, including any accrued and unused vacation hours. The central question is not whether the wages are owed, but who is legally entitled to receive them.
If the employee was married or had a registered domestic partner, California provides a streamlined process. A surviving spouse or registered domestic partner may collect the deceased employee’s salary or other compensation, including accrued unused vacation, without opening a probate proceeding, if the required affidavit or declaration is provided to the employer. The affidavit must include specific statements regarding the employee’s death, the claimant’s status, the absence of a California probate proceeding, and the claimant’s right to collect the wages. Employers should also require reasonable proof of identity before releasing payment.
California law limits the amount of wages that may be paid directly to a surviving spouse or registered domestic partner. For deaths occurring on or after April 1, 2025, the statutory net compensation limit for the spousal collection procedure described above is $20,875. If the final wages exceed that amount, the employer will need to wait for formal estate documentation before releasing the funds. Because the amount is adjusted every three years, employers should confirm the current limit before issuing payment. Special rules may apply for certain public safety employees, so employers should evaluate those circumstances separately.
If the employee was not married and did not have a registered domestic partner, the answer depends on whether someone with authority over the estate comes forward. If there is a will, trust, executor, or other authorized representative, the employer should follow proper written instructions and make payment consistent with the representative’s authority. If no formal probate has been opened and the estate qualifies as a small estate, heirs may be able to use California’s small estate affidavit procedure. For deaths on or after April 1, 2025, the relevant small estate threshold is $208,850, excluding real property. At least 40 days must pass after the employee’s death before that affidavit process may be used.
If the estate is larger than the small estate threshold, or if there is a probate proceeding, the safer course is generally to make the final wages payable to the employee’s estate or to the authorized estate representative. If no spouse, registered domestic partner, heir, executor, or other authorized person contacts the employer, the employer should not keep the funds indefinitely or guess at the proper recipient. Instead, the employer should contact the Office of the Labor Commissioner for guidance regarding payment of the unclaimed wages for later disbursement to lawful beneficiaries.
Employers should document each step, obtain the required affidavits and proof of identity, and avoid issuing payment until the legal authority of the recipient is clear. Because final pay for a deceased employee implicates wage payment rules, probate procedures, and family status issues, employers are encouraged to consult employment counsel before releasing the final check.