Run a dismissal payroll

Summary

Admins can learn about dismissal paycheck requirements by state, as well as how to process a dismissal payroll within Gusto.

Content

When you dismiss an employee in Gusto, you may need to run a dismissal payroll to issue their final paycheck.

Important: Dismissals cannot be reversed. Make sure you want to end employment and remove the employee from future payrolls before proceeding.

Before you run a dismissal payroll

Always dismiss the employee in Gusto first.
Review compliance rules for your state, including final pay deadlines and PTO payout rules. Learn more about what to expect when you dismiss someone.
Some states require you to issue the last paycheck in person. To stay compliant, dismissal payrolls default to check payment.

👉 For dismissing contractors, see this article.

How dismissal payrolls work

The dismissal payroll appears after you dismiss the employee.
You can run it anytime.
If you run it before the dismissal date, the employee will not receive an email notification about the payment.
- This article explains dismissal notifications and what to expect when you dismiss someone.

If you already paid someone their final pay on a regular or off-cycle payroll, you can skip the dismissal payroll the same way you skip regular payroll for someone.

Deductions on dismissal payrolls

Externally managed benefits: Apply automatically.
Gusto-managed benefits: One full pay period of deductions will always apply.
- ⚠️ Gusto cannot prorate deductions. Example: If an employee is dismissed on January 15 and benefits continue through February 1, we will not capture the remaining deductions the employee owes for the second half of the month.
- To apply additional deductions, process the final pay as an off-cycle payroll, and choose to apply them.
Severance pay: If marked as severance, 401(k) deductions (externally managed or integrated) will not apply.

Dismissal paycheck requirements by state

When an employee is dismissed, every state has its own rules about:

When you must issue a final paycheck.
Whether unused PTO must be paid.

Important: In some states, late payments can lead to penalties, damages, or even criminal consequences. Always review your state’s Department of Labor website.

If you have specific questions about a termination, work with an employment attorney.

See the table in this article for details by state.

Table last revised January 15, 2025.

State	Dismissal paycheck deadline(s)	Requirements for paying out unused vacation	Additional information
Alabama	No statute	No (unless otherwise stated)	An employer’s policy or employee contract governs whether earned, unused vacation is paid upon termination.
Alaska	If the employee leaves involuntarily: Within 3 working days. If the employee leaves voluntarily: Next scheduled payday, that's at least 3 days after the employee gives notice.	No (unless otherwise stated)	An employer’s policy or employee contract governs whether earned, unused vacation is paid upon termination.
Arizona	If the employee leaves involuntarily: Within 7 working days or the next scheduled payday, whichever is sooner. If the employee leaves voluntarily: Next regular payday.	No (unless otherwise stated)	An employer’s policy or employee contract governs whether earned, unused vacation is paid upon termination.
Arkansas	You're required to pay the employee by the next scheduled payday.	No (unless otherwise stated)	An employer’s policy or employee contract governs whether earned, unused vacation is paid upon termination.
California	If the employee leaves involuntarily: Immediately. If the employee leaves voluntarily: Immediately if they give at least 72 hours of notice. The payment is due within 72 hours if no notice was given.	Yes	Employers are required to pay employees any accrued, unused vacation time upon termination.
Colorado	If the employee leaves involuntarily: Immediately, with some exceptions. If the employee leaves voluntarily: Next regular payday.	Yes	Earned vacation time is considered wages required to be paid out upon termination.
Connecticut	If the employee leaves involuntarily: Next business day. If the employee leaves voluntarily: Next scheduled payday.	No (unless otherwise stated)	An employer’s policy or employee contract governs whether earned, unused vacation is paid upon termination.
Delaware	You're required to pay the employee on the next scheduled payday, or within 3 business days, whichever is later.	No (unless otherwise stated)	An employer’s policy or employee contract governs whether earned, unused vacation is paid upon termination.
Florida	No statute	No	No state statute addresses payment of accrued vacation on termination.
Georgia	No statute	No	No state statute addresses payment of accrued vacation on termination.
Hawaii	If the employee leaves involuntarily: You're required to pay the employee on their last day. If the employee leaves voluntarily: Next scheduled payday, unless the employee gives at least one pay period’s notice of intention to quit, then you're required to pay the employee on their last day.	No (unless otherwise stated)	An employer’s policy or employee contract governs whether earned, unused vacation is paid upon termination.
Idaho	If the employee leaves involuntarily: Next scheduled payday or within 10 business days, whichever is sooner. If the employee makes a written request for earlier payment, within 48 hours (excluding weekends and holidays) of receiving the request. If the employee leaves voluntarily: Next scheduled payday or within 10 business days, whichever is sooner. If the employee makes a written request for earlier payment, within 48 hours (excluding weekends and holidays) of receiving the request.	No (unless otherwise stated)	An employer’s policy or employee contract governs whether earned, unused vacation is paid upon termination.
Illinois	If the employee leaves involuntarily: Immediately if possible, but no later than the next scheduled payday. If the employee leaves voluntarily: Immediately if possible, but no later than the next scheduled payday.	Yes	An Illinois company cannot put into place a company policy that does not pay out PTO upon termination.
Indiana	You're required to pay the employee by the next scheduled payday.	Yes (unless otherwise stated)	Accrued vacation pay is considered a form of compensation. An employee may be entitled to accrued unused vacation time if they've met any certain conditions of a company policy or employment contract.
Iowa	You're required to pay the employee on or before the company's next regular payday.	No (unless otherwise stated)	An employer’s policy or employee contract governs whether earned, unused vacation is paid upon termination.
Kansas	You're required to pay the employee on or before the company’s next scheduled payday.	No (unless otherwise stated)	An employer’s policy or employee contract governs whether earned, unused vacation is paid upon termination.
Kentucky	You're required to pay the employee on the next scheduled payday, or within 14 days, whichever is later.	No (unless otherwise stated)	An employer’s policy or employee contract governs whether earned, unused vacation is paid upon termination.
Louisiana	You're required to pay the employee on the next scheduled payday or within 15 days, whichever is sooner.	No (unless otherwise stated)	An employer’s policy or employee contract governs whether earned, unused vacation is paid upon termination.
Maine	If you have more than 10 employees, you're required to pay the employee on or before the company's next regular payday.	Yes	You're required to pay out all unused PTO with their final paycheck.
Maryland	If the employee leaves involuntarily: Next scheduled payday. If the employee leaves voluntarily: Next scheduled payday.	Yes (unless otherwise stated)	Employers are required to pay employees any accrued, unused vacation time upon termination unless the employer's written policy states that vacation time will be forfeited upon termination.
Massachusetts	If the employee leaves involuntarily: You're required to pay the employee on their last day. If the employee leaves voluntarily: Next scheduled payday.	Yes	Employers are required to pay employees any accrued, unused vacation time upon termination.
Michigan	You're required to pay the employee on or before the company’s next scheduled payday.	No (unless otherwise stated)	An employer’s policy or employee contract governs whether earned, unused vacation is paid upon termination.
Minnesota	If the employee leaves involuntarily: You're required to pay the employee within 24 hours of their demand for wages. If the employee leaves voluntarily: You're required to pay the employee by the next scheduled payday that's more than 5 days and less than 20 days from their last day.	No (unless otherwise stated)	An employer’s policy or employee contract governs whether earned, unused vacation is paid upon termination.
Mississippi	No statute	No	No state statute addresses payment of accrued vacation on termination.
Missouri	If the employee leaves involuntarily: You're required to pay the employee on their last day. If the employee leaves voluntarily: Next scheduled payday.	No	Employers are not required to pay employees for earned, unused vacation upon termination.
Montana	If the employee leaves involuntarily: Immediately, unless you have a pre-existing written policy that extends the timing of final payment. The written policy cannot exceed the next scheduled payday or 15 days, whichever is earlier. If the employee leaves voluntarily: Next scheduled payday or 15 days, whichever is earlier.	No (unless otherwise stated)	An employer’s policy or employee contract governs whether earned, unused vacation is paid upon termination.
Nebraska	You're required to pay the employee on the company's next regular payday or within two weeks, whichever is sooner.	Yes	All earned and unused vacation and PTO benefits must be paid to the employee with their final wages.
Nevada	If the employee leaves involuntarily: Immediately. If the employee leaves voluntarily: You must pay on either the next regular payday or within seven days after they resign (whichever is earlier).	No (unless otherwise stated)	An employer’s policy or employee contract governs whether earned, unused vacation is paid upon termination.
New Hampshire	If the employee leaves involuntarily: Within 72 hours. If the employee leaves voluntarily: Next scheduled payday. If the employee gives at least one pay period’s notice, then within 72 hours.	No	You can pay out unused PTO if you'd like, but you are not required to.
New Jersey	If the employee leaves involuntarily: Next scheduled payday. If the employee leaves voluntarily: Next scheduled payday.	No (unless otherwise stated)	An employer’s policy or employee contract governs whether earned, unused vacation is paid upon termination.
New Mexico	If the employee leaves involuntarily: You're required to pay them within 5 days of their last day. If the employee leaves voluntarily: You're required to pay them on or before the company's next regular payday.	No (unless otherwise stated)	An employer’s policy or employee contract governs whether earned, unused vacation is paid upon termination.
New York	You're required to pay the employee by the next scheduled payday.	Yes	An employer must pay the employee for accrued unused vacation if there's no written forfeit policy.
North Carolina	You're required to pay the employee by the next scheduled payday.	Yes	An employer must pay the employee for accrued unused vacation if there's no written forfeit policy.
North Dakota	You're required to pay the employee by the next scheduled payday.	Yes, in most cases	Must pay accrued time off unless employee is leaving voluntary and all of the following apply: Employee has been employed for less than 1 year. Policy states that there's a limitation of pay of accrued time off. The employee gave the employer less than 5 days verbal or written notice.
Ohio	You're required to pay the employee by the next scheduled payday.	No (unless otherwise stated)	An employer’s policy or employee contract governs whether earned, unused vacation is paid upon termination.
Oklahoma	You're required to pay the employee by the next scheduled payday.	No (unless otherwise stated)	An employer’s policy or employee contract governs whether earned, unused vacation is paid upon termination.
Oregon	If the employee leaves involuntarily: You're required to pay them by the end of the next business day. If the employee leaves voluntarily: You're required to pay them on their last day if they quit with at least 48 hours' notice, unless that day is a weekend or holiday. In that case, their check is due on the next business day. If the employee quits with less than 48 hours' notice, then you’re required to pay them on the next scheduled payday or within 5 business days, whichever comes first.	No (unless otherwise stated)	An employer’s policy or employee contract governs whether earned, unused vacation is paid upon termination.
Pennsylvania	You're required to pay the employee by the next scheduled payday.	No (unless otherwise stated)	An employer’s policy or employee contract governs whether earned, unused vacation is paid upon termination.
Rhode Island	You're required to pay the employee by the next scheduled payday.	Sometimes	If the employee has been working for the company for more than one year, you're required to pay out all unused PTO with their final paycheck. If the employee has been working for the company for less than one year, you are not required to pay out unused PTO.
South Carolina	If the employee leaves involuntarily: Next scheduled payday, but not to exceed 30 days. If the employee leaves voluntarily: Next scheduled payday, but not to exceed 30 days.	No (unless otherwise stated)	An employer’s policy or employee contract governs whether earned, unused vacation is paid upon termination.
South Dakota	If the employee leaves involuntarily: Next scheduled payday. If the employee leaves voluntarily: Next scheduled payday.	No (unless otherwise stated)	An employer’s policy or employee contract governs whether earned, unused vacation is paid upon termination.
Tennessee	If the employee leaves involuntarily: Next scheduled payday or within 21 days, whichever is later. If the employee leaves voluntarily: Next scheduled payday or within 21 days, whichever is later.	No (unless otherwise stated)	An employer’s policy or employee contract governs whether earned, unused vacation is paid upon termination.
Texas	If the employee leaves involuntarily: Within 6 calendar days. If the employee leaves voluntarily: Next scheduled payday.	No (unless otherwise stated)	An employer’s policy or employee contract governs whether earned, unused vacation is paid upon termination.
Utah	If the employee leaves involuntarily: Within 24 hours. There are some exceptions for commissions for a sales agent. If the employee leaves voluntarily: Next scheduled payday.	No (unless otherwise stated)	An employer’s policy or employee contract governs whether earned, unused vacation is paid upon termination.
Vermont	If the employee leaves involuntarily: Within 72 hours. If the employee leaves voluntarily: Next scheduled payday.	No (unless otherwise stated)	An employer’s policy or employee contract governs whether earned, unused vacation is paid upon termination.
Virginia	You're required to pay the employee by the next scheduled payday.	No (unless otherwise stated)	An employer’s policy or employee contract governs whether earned, unused vacation is paid upon termination.
Washington	If the employee leaves involuntarily: Next scheduled payday. If the employee leaves voluntarily: Next scheduled payday. There are some exceptions for specific industries.	No (unless otherwise stated)	An employer’s policy or employee contract governs whether earned, unused vacation is paid upon termination.
Washington DC	If the employee leaves involuntarily: You're required to pay them the day after their last day. If the employee leaves voluntarily: You're required to pay them on or before the company's next regular payday or within 7 days of their last day, whichever is sooner.	Yes (unless otherwise stated)	You're required to pay out all unused PTO with their final paycheck unless your company has a written policy that indicates unused PTO will not be paid out when an employee leaves the company.
West Virginia	You're required to pay the employee by the next scheduled payday.	No (unless otherwise stated)	An employer’s policy or employee contract governs whether earned, unused vacation is paid upon termination.
Wisconsin	You're required to pay the employee by the next scheduled payday.	Yes (unless otherwise stated)	You're required to pay out unused PTO if your company's PTO policy does not include a written PTO forfeit policy. If your PTO policy includes forfeiture, then you are not required to pay out unused PTO.
Wyoming	You're required to pay the employee by the next scheduled payday.	No (unless otherwise stated)	An employer’s policy or employee contract governs whether earned, unused vacation is paid upon termination.

Run a dismissal payroll

After you've dismissed your employee in Gusto, admins with the required permissions may be prompted to process a dismissal payroll to pay out their final wages. Dismissal payrolls can be issued by check or direct deposit, depending on your applicable state rules regarding final payment.

If you've already paid the employee and need to remove the dismissal payroll notification, skip the payroll.

If you need to backdate a dismissal, contact us through the Help section of your Gusto account.

Sign in to Gusto.
Click the Pay section and select Run payroll, or click the notification on your Home page for the dismissal payroll.
Select the dismissal payroll.
- The dismissal payroll will appear here after the final day of employment.
- If the dismissal payroll doesn't appear here, this means it was selected to pay the employee their final pay on the company's next regular payroll.
Click Run Payroll.
If you have multiple bank accounts set up, select which bank account you'd like to process payroll from.
- If you do not see this option, head to this article to learn more.
View the prorated payment, and enter any amounts for a bonus, severance, reimbursements, or other additional earnings.
- Click the prorated amount if you wish to change it.
- If state rules permit, you can click the caret next to "Check" to change the payment to "Direct deposit."
- Note: If you choose to pay the employee by direct deposit, Gusto doesn't have insight into when the direct deposit will hit their bank account. This is because it's the employee's bank that processes the depositing of the actual funds.
Click Add Personal Note to include a message on the employee's paystub.
Click Save & Continue.
On the Time Off screen, you'll have the option to select a checkbox and pay out any remaining vacation hours owed.
- Check out this article for dismissal paycheck requirements (by state).
- If you wish to also pay out any remaining sick hours, add the amount on this page.
Click Save & continue.
Review the payroll information and click Submit payroll.
If you processed the payment as a check, write the final amount on a check and hand it to your employee.

Your employee will see this paystub in their Gusto account one day after their dismissal date.

If you're looking to dismiss a contractor, head to this article.

Calculate prorated pay for a dismissal payroll

Gusto prorates dismissal pay automatically on final regular payrolls or dismissal payrolls.

If you need to calculate manually, do so, and then pay them on an off-cycle payroll.

Find the daily rate for a salaried amount, and multiply it by days worked:

Daily rate = Annual salary ÷ 260 (workdays in a year).
Prorated pay = Daily rate × Days worked in the pay period.

Example:

Annual salary: $100,000
Daily rate = $100,000 ÷ 260 = $384.62
Worked 3 days → $384.62 × 3 = $1,153.85 (rounded)

Pay a dismissed employee

When you dismiss an employee, you can choose to pay severance in the dismissal payroll (find the dismissal payroll in the Offboarding tab).

If you already ran the dismissal payroll but still need to pay severance—or another type of earning—run an off-cycle payroll.

Pay a dismissed employee (after you've run the dismissal payroll)

You must have the right admin permissions to run this payroll.

Sign in to Gusto.
In the left menu, click People.
Click the Dismissed tab.
Click the employee’s name.
Under Information, click Pay.
Scroll to the Recent paystubs section.
Click Run off-cycle payroll.
Click + Other Earnings.
Enter the work period.
Enter the payment date.
Choose how deductions and contributions should be handled.
Review or edit tax withholding rates.
In the Hours and additional earnings section, click + Other Earnings.
Scroll down and enter the severance amount in the Severance field. This option only shows if the employee has been dismissed.
- Severance pay will not count toward an employee’s 401(k) if the plan is managed outside of Gusto or through an integrated provider.
(Optional) Click Add Personal Note to include a message about severance on the paystub.
Click Save & Continue.
Click Submit Payroll.

Dismissing an employee with a garnishment

Legal requirement: If you dismiss an employee with a garnishment order for any reason, you're required by law to notify the collecting agency immediately. State guidelines vary, but it's recommended you contact the agency 5 days after you learn that an employee will cease employment or within 5 days after dismissal, whichever occurs earlier.

Important: Gusto will debit and remit payment for garnishments on dismissal payrolls for all states except for South Carolina.

This form from the U.S. Department of Health & Human Services is accepted as fulfillment of the cessation of employment requirements for some states, but not all. States may require additional information or specific employer action.

Online reporting

Electronic Termination (eTerm) on the Federal Child Support Portal allows you to notify the state child support agency electronically when an employee terminates. If you'd like to report terminations online and are not currently registered, you can register to use the employer's online services, including eTerm, on the Portal.

It’s our policy to guarantee lifetime access of payroll information to all users, subject to compliance with our Terms of Service.

Keywords: employee profile details dismissal payroll severance prorated pay dismiss dismissal dismissing final pay severance

Run a dismissal payroll

Summary

Content

Before you run a dismissal payroll

How dismissal payrolls work

State

Dismissal paycheck deadline(s)

Pay a dismissed employee (after you've run the dismissal payroll)

Online reporting