Repayment for Company Property

franfields · July 2001

If an employee does not return property or equipment (specifically laptop computers) when they leave, can we deduct the value from their final paycheck and any ESOP payout? We are having a disagreement here about the legality of docking wages. We are in Arkansas.

Down_the_Middle · July 2001

Your state law will be your guidance on this issue. While many states prohibit final payroll deductions for unreturned company property (unless there is malicious , willful or reckless destruction)I seriously doubt your ability to deduct the full value of the laptop. Your state garnishment laws prohibit deductions that drop the net disposable income below minimum wage and I'm quite certain your ability to deduct any funds from the employee's ESOP is definately not permitted.

Rockie · July 2001

South Carolina law is the same as your state as are most states. We usually get employees to sign for such expensive items with an agreement to return upon termination of employment. Most employees that we issue these type items to do return them, but occasionally you may have someone who does not or leaves under back circumstances. In that instance, you may be able to pursue legal action to recover, but the expense may be prohibitive. We are very selective as to who we let have these type items.

Down_the_Middle · July 2001

If you don't have some sort of agreement for the employee to sign, that addresses the return of the property, as Rockie suggests, you can certainly file suit that the employee either return the item or make payment for it. Granted, you'll not want to do this all the time, but doing it a couple of times sends a strong message that departing employees are expected to return company property. At the very least, I'd develop a written agreement to begin using for anyone that has that type of property in their possession (e.g. expectations for reasonable care, any surcharges for excess wear/tear, prevent maint issues, upgrade issues/respon's, return respon's, etc.....)

Pattie Wills · July 2001

In Maryland, employers are not able to deduct anything that the employee hasn't agreed to. We routinely issue laptops, cell phones, pagers, autos, to a good percentage of our staff. When the equipment is issued to them, we have them sign for it and agree to repay the company if it is lost, stolen, broken,not returned upon termination, etc. We have also covered ourselves in our Employee Handbook. Under Paycheck Deductions, it states," Deductions for benefit contributions and miscellaneous itemsnot required by law are made only with signed authorization of the employee, however, if your employment terminates and you owe the company money, your final paychec will be reduced by any amount owed." When employees sign the acknowledgement for the Handbook, they sign that they understand and agree to all the terms within.

Gary Jiles AR · August 2001

>If an employee does not return property or equipment (specifically
>laptop computers) when they leave, can we deduct the value from their
>final paycheck and any ESOP payout? We are having a disagreement here
>about the legality of docking wages. We are in Arkansas.

You cannot deduct an amount that brings an employee to less than minimum wage in wages for the pay cycle. Otherwise, you should be fine, but you should have your attorney give you an opinion prior to deducting.

Gary D. Jiles
Editor, Arkansas Employment Law Letter
[email]gdj@jlj.com[/email]

Repayment for Company Property

Comments