From the Hotline: Claiming an Employee’s Estate and Final Pay
Question: How should we proceed if an employee recently passed away and both his wife and girlfriend are demanding the final pay? The employee was in the process of divorcing his wife and his girlfriend has custody of the children.
Answer: When an employee dies, you have to contend with the legal issue of who would be entitled to any yet-unpaid wages, and whether the person claiming them has provided proper documentation of his or her claim.
Your state law determines who is entitled to a deceased employee’s wages, and may set limits on the amount you’re required to pay out. Usually, the surviving spouse is the primary recipient of any wages due to a worker at the time of death; if there’s no surviving spouse or adult children (those 18 years or older), parents and siblings would be the next claimants in line. A few states have provisions granting designated beneficiaries ownership instead of granting it automatically to the spouse.
Usually, persons claiming a right to a deceased employee’s estate must present legal documentation verifying their relationship to the deceased and their authorization under state law to make a claim. An affidavit, a letter of administration, and an acknowledgement receipt are three of the most common documents required by the state to claim an employee’s estate.
In addition to presenting the proper documentation, an individual also must claim a deceased employee’s wages within a certain time frame. Some states require recipients to claim the owed wages within 40 days. If the claimant doesn’t present a claim and/or provide proper documentation within the appropriate time limit, then you are required to remit the unpaid wages to the state. Thereafter, the state will handle any claims.
In Tennessee, an employee can designate a beneficiary to receive payment of any wages due at the time of the employee’s death. If an employee has not designated a beneficiary, the employer can pay wages due to a deceased employee of up to $10,000 directly to a surviving spouse or to surviving children if there is no surviving spouse. Source: Payment to Deceased Employees: Tenn. Code Ann. § 30-2-103.