Federal law prohibits an employer from withholding an employee paycheck for any reason. The Society for Human Resource Management indicates the Fair Labor Standards Act requires employers to pay employee wages on the next regular payday for the previous pay period. Various states have different laws regarding when a terminated employee must receive his paycheck.
According to US News & World Report there are several prominent misconceptions regarding employers withholding paychecks. Many people believe their bosses have the right to delay or reduce payment based on allegations of poor performance. However, federal law prevents employers from withholding or docking pay based on performance under any circumstances. Additionally, employers cannot withhold paychecks in the event that an employee damages company equipment. Some states force employers who are late in delivering paychecks to pay additional funds as a penalty for being late.
The Montana Department of Labor and Industry reports that Montana imposes a penalty on employers who are late in delivering paychecks to staff. It also stipulates that wages cannot legally be withheld because an employee made a mistake that cost a company money, damaged any company equipment or for any other reason. It includes those who earn tips or who are paid for piece work in its regulations.