Employees Owing Company

We have a great number of employees that go out on the road and use company credit cards for any charges incurred. We have found that a number of these employees run up unauthorized charges on the company credit card and never make any attempt to repay the company. Can we legally withhold that money owed the company from their paychecks? Also, when an employee leaves the company and keeps company property, can we deduct the cost of that property from the paycheck?


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  • You need to have something in writing signed by the employee which covers these
    kinds of situations. Even then, from a federal law standpoint, you cannot make
    a deduction which would take the employee's wages below the minimum wage for the
    pay period in question. There may also be a state law on this subject which you
    should check out. There is no separate wage and hour law in Tennessee.

    John Phillips, Tennessee Employment Law Letter, 423/786-8325

  • Many companies are getting away from company credit cards because of this. They will either pay the annual fee for the credit card of the employee's choice or they will work out a deal with a credit card company to issue a card to a list of employees, but credit card belongs to the employee, not the company. The employee is then responsible for all charges. Usually a part of the deal is that the company must notify the credit card company if it terminates the employee and then the credit card company has the option whether to allow the card to remain in effect. The credit card company will usually look at the pay history in making that decision. If your employee cannnot qualify for a credit card, you need to think long and hard about whether you would put one in their hands. You may want to go to a systenm of advances and have a policy that says you will not give another advance to the employee until the expense report is turned in on the current advance. Hope that helps you.

    Margaret Morford

  • One issue that seems to arise under your facts is: Is there a company policy about use of company credit cards, and are the employees violating it. If your company does not have a policy, it may want to implement one. Then when an employee charges personal items on a company credit card, the issue can be handled as a performance issue as well as an issue about repayment. (Question: Why would your company want to be in the business of giving credit to employees at the company's cost?)

    Good Luck.
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