Federal and state wage and labor laws require employers to pay employees promptly, and therefore, withholding a paycheck is not allowed. Employers are legally obligated under the Fair Labor Standards Act to follow certain rules and regulations regarding when employees should be paid, according to About.com. Employers that hold paychecks may be severely penalized for disobeying labor laws.
States decide how soon employees must be paid after the end of a pay period, according to U.S. News and World Report. An employer is not allowed to hold back a paycheck to punish an employee for performance reasons. For example, some employers may think that it is okay not to pay an employee who has not turned in a time sheet. While not having an accurate time sheet is annoying for the employer, the company is still under a legal obligation to pay the worker within the time set by state guidelines. The burden is on the employer to have systems in place to ensure that employees are paid on time.
In addition, there are strict rules concerning a last paycheck. When workers leave a company for any reason, they must be paid in a timely manner that adheres to state guidelines, according to the U.S. Department of Labor. Some states require that last checks be paid immediately. Employers should check state law concerning end of employment payment rules.