Voluntary Wage Assignments

POTATO

I have an employee who has requested that we withhold his rent from his paycheck and for us to pay it directly to his landland. Without giving too much detail, his homelife is such that his bills are not getting paid and this is a solution he has come up with to keep his family from going homeless. This is not a problem of HIM not being responsible, this is a sad situation at home. My question is do any of you see any "legal" pitfalls with us making this type of voluntary deduction especially since it would be a huge portion of his paycheck? I have searched everywhere regarding this subject but can only find information on garnishment type deductions. I can't seem to find any information regarding voluntary wage assignments - specifically if there are dollar limits an employee can have assigned?

joannie

While it is certainly commendable for you to want to help an employee in this manner, I would advise against it, even if he signed a voluntary deduction agreement. First, that is not a service you would be able to provide all employees. Secondly, would you want to be responsible should the employee be evicted if the check was lost in the mail?

If you have the capability of splitting direct deposits, I would suggest the employee open a new account with a financial institution that provides direct bill pay and depositing the amount of his rent in that account each month. He can then schedule the payment in advance.

Good luck with this one.

Dutch2

What Joannie said.
The ee should set up direct deposit with his bank (or Credit Union - just for Frank) and then he can have x dollars from each paycheck direct deposited into an account to be used for paying his rent/mortgage.
We have some folk that have their payroll split out amoung several accounts and this works great for them.
Good luck.

NeedCoffee

What Joannie and Dutch said.

Seriously. It's your best bet in this situation.

cnghr

What everybody else has already said. It's great that you want to help out this employee and too bad about his home situation, but wage deductions are not the way to go in a case like this, nor is taking on the responsibility of paying your employee's rent.

davids

I agree with others that is not something you want to do. If you do it for this employee, it will be difficult to say no to others. However, you might to check your state's wage/payroll laws to ensure there isn't some crazy provision that requires you acquiesce to an employee's request for a voluntary deduction.

Another option, in addition to separating out direct deposit to a second account, is to provide the employee a monthly draw (if you are set up to do that and are willing to do it for others) that provides the employee a check in the exact amount of the rent. It would then be the employee's responsibility to endorse the check over to his landlord.

POTATO

Thanks! for all your messages. I have been trying to talk our kind-hearted president out of this and while he is a little hesitant to try this, I was hoping for some "thou shalt nots" so-to-speak to force the issue dead.

ACU Frank

Thanks for thowing me that bone, there, Dutch!

joannie

What, I don't get any credit for being politically correct (me, pc, imagine that) for using the term "financial institution"?

stilldazed

I absolutely agree with other posters that as an employer you should refrain. Is your state, by any chance, a community property state? and is your employee married? If you are looking for legal guidance, that may be an option for you. However, not be a legal, I really don't know, but I would research it if it were me (in Florida, & Florida is).

The wages belong to the employee, and while the employee can legally voluntarily assign away his/her wages, if the fella is married, his wages may be part of his community property. If he is married and having problems at home, voluntarily assigns away his wages through his employer, (which is not a bank and subject to community property), he could conceivably be diverty community property away from the 'community' without full community authorization. That may be a stretch, but strangers things have happened. All you would need to test the theory would be a disgruntled spouse who has a history of having received the money and the money went away.

Aside from that, your risk as an employer is as described by previous posters. By allowing the practice, you are essentially allowing a 'benefit' that is probably not part of your benefit program, and you are restricting eligibility to this one employee. If you are not talking about a benefit (or service such as direct deposit), payroll deductions to recover debts should be limited to court orders and garnishments. Your employee's efforts to protect the house and potentially his credit is really his responsibility, not yours. He should take the steps to ensure that his payments are made on time.

best wishes.

POTATO

Your response sealed my deal. Yes, we are a community property state and the LAST thing we want to do is divert money that is "technically" 1/2 our employees' spouses!! Thanks to all!

stilldazed

My scenario is a stretch, but I think conceivable. If I were an attorney and had the opportunity to challenge an issue on that basis, I think I would just to confirm the outcome.

Glad you have a decision you feel good about.

best wishes.