Payroll Deductions for Employee Benefits

Can anyone direct me to an info source that describes/discusses $$ limitations on payroll deductions for employee benefits for Florida workers? We have salary reduction agreements in place for employee benefits, and the issues at hand do not currently include court action (i.e., bankruptcy, garnishments).

To clarify, we typically take payroll deductions on a prescribed schedule from employee payroll checks to cover insurance premiums for each employee's group benefits package. We have a couple of employees who have $1,000 to $2,000 debts for prior months (late 03/early 04). (With current benefits costs, their debts accumulated in 3 to 6 months.) There were extenuating circumstances, yada, yada, yada, and executive approval led to them taking longer than planned leaves of absence without interruption of benefits. We (employer) paid monthly to keep benefits in place. We are now looking for reimbursement from the employee. We'll go for garnishment through the court if we must, but I'm looking for acceptable alternatives. A recovery process has been done through payroll in the past, but references to "rules" have been lost after significant turnover in Personnel & Payroll. If I have to write an agreement for these employees to sign, I want it to be consistent with legal limitations.

Thanks,

Comments

  • 7 Comments sorted by Votes Date Added
  • I would sit down with the individuals, bring up the issue and offer them alternatives. I.e paying an extra $100 per week, and extra $50 and so on. But make sure all the options are acceptable to you!
    Then have a form ready with those options, let them choose...........and begin recouping what is owed. I have done it before. As long as it is not to painful............most will agree. As long as it does not take them below minimum wage, and have signed off on you doing it you will be fine.
    My $0.02 worth.
    DJ THe Balloonman
  • Thanks for the response. I truly appreciate the few minutes you spent to share. We've done what you suggested, but we're having some resistance by the employees in both situations. My gut tells me that they have let themselves get overwhelmed by the size of the outstanding balances and how quickly the balances got to the levels they did. Because of the resistance, we will be getting a little more aggressive but want very much to ensure we do what is fair, what is right, and remain legally compliant. Going to court for a garnishment is a last alternative, and we're hoping to head this off before having to take that step.

    I have found guidelines on court-ordered garnishment for Florida, which spells out clearly the maximum we can deduct and that wages can even be exempt if the employee is the primary wage earner. I'm not sure garnishment applies to group benefits in employment situations, however, and the process in Florida can be a little costly. I'm also having trouble finding something in writing that confirms your reference to keeping the employee at or above minimum wage, which is what I think also, but I'd like to see it in print somewhere. As a complicating factor, my directive to our payroll specialist in the last cycle was to do just that, keep the net pay at minimum wage x hours worked and take everything else in a payroll deduction. She misunderstood, and I discovered it after payroll checks were released. We ended up issuing a net payroll check of about $10 for about 37 hours of work (nonexempt position paying about $8.50/hour). Everything in me tells me that is a mistake and that what you suggest is required, but I can't find the support references to back up my hunches. Anymore suggestions?

    Again, thanks. You're helping confirm my hunches, which is helping me keep my focus, which is helping me stay energized after continuing to turn up nothing.
  • I have continued to search and found the following information, just in case anyone else has a question and to ask for confirmations on interpretation. My source is BLR. Their sources for the national-level info are not included in their documents. Florida DLES is listed as the contact point for Florida information. I'll continue to search there.

    National Level:
    Deductions that may reduce wages below minimum wage include costs for:
    1. meals, lodging, & other facilities
    2. transportation provided by the employer
    3. fuel & merchandise
    4. instructional costs (i.e., tuition furnished by a college to its student employees)
    5. deductions that benefit the employee (includes life insurance, health insurance, pension, welfare plans and may cut into minimum wage if the employee freely assents and if the employer derives no profit or benefit from the deductions)

    Deductions that may not reduce wages below minimum wage include costs for:
    1. cash shortages (for employees who handle cash)
    2. damages (to company property caused by employee)
    3. personal use of company car
    4. providing or maintaining uniforms (if uniforms are required by law, custom, or the employer and are actually uniforms)

    The above information applies to nonexempt employees. Exempt employees should have no deductions from their pay without prior agreement between the employer & employee.

    Florida Specific:
    BLR's Florida-specific info further asserts that "Florida has no general law covering deductions from pay by private employers." "Employers should make deductions that are required by law and may make deductions for other items that are authorized by employes. There is no general ban on employers making deductions for items such as uniforms, tools, medical exams, and damage caused by employees." Public employers in Florida do have some guideliness. I won't elaborate since I don't represent a public employer.

    I think I am much closer to finding what I need.

    My thoughts so far on our case ($10 payroll check) are that given that we are a private employer, the employee is nonexempt, the deduction is for a health insurance premiums and is less than a full health insurance premium for the payroll period, and we have a salary reduction agreement for the premium, we're OK but uncomfortably close to the line. Had we gone into outstanding debt for past premiums, my thought is that we may have crossed over. (This employee has health insurance only, and expected premiums are $215. We calculated gross wages, took the appropriate payroll taxes, took $180 of the expected $215, and left about $10 for a net payroll check. This time around the outstanding balance went up by only $35 instead of $215.) Of course, from a human relations standpoint, we will continue to solicit full agreement (in writing from the employee) that deductions can be enough to recover as much of a current premium as possible to keep the outstanding balance from rising more and to recover back premiums when possible, and we will continue to try to help the employee not feel overwhelmed by a rapidly growing debt. The other of the two cases is a little easier, except the employee is now off work and may not return. (We'll know within a week or two.) In that case, we may have to write off the balance as unrecovered debt and decide whether to pursue court remedies.

    I'm still interested in hearing other interpretations on the information I've listed above. This is long, hopefully not too long to keep folks from reading & responding, and I included the info for any folks who may not have access to BLR publications.

  • A few thoughts.............
    First someone only getting a check for $10.00 is not going to work........they will quit, and it might not be legal.
    Second, talk with your insurance company. If premiums have not been paid, you can COBRA them. I have been burned like you have in the past, and will no longer allow that.
    I have an employee now who is behind......only upon providing notice of intent to cancel did he bring in a weeks insurance payment. Last Thursday and Friday I mailed out two more intent to cancell notices and I am caught up. Well I guess I need to send another one out today. I am not going to allow him to not pay then stick us.
    In the future, you need to stay on top of them. Let the insurance company be the bad guy..........
    My $0.02 worth.
    DJ The Balloonman
  • I absolutely agree with you. We may ultimately have to write off the debt due to termination, but if we Cobra, the premiums are higher, we'll certainly have to write off the debt and pursue potential legal remedy for recovery. Plus, if there is true financial hardship going on in the family, they won't Cobra and may lose benefits totally. The outstanding balance in our case of the $10 payroll check has been awkward as the debt issue is with senior mgmt blessing so far. The debt balance is getting out of hand and may be one of those decisions that senior staff regret after the fact. The payroll part threw me off a little. I troubleshoot payroll and administer benefits as HR director, but our payroll process is part of a sister department to HR and supervised by a different director. We both report to CFO. As a trouble shooting exercise on the legalities of what we did (after the fact), our CFO sent the issue to me to research, so I've basically been in the reactive mode trying to improve all of our comfort levels that the $10 payroll check was not "legally" incorrect (although there are obviously some ethical issues). This is yet another valuable learning experience for me, and we'll definitely tighten up our current process a little.

    Thanks, again, for your input. It is refreshing to hear that my hunches might not be so far out there.


  • My question is: Did you make the payroll deductions without specific signed EE authorization? If so, you may be in some hot water. You may not deduct anyhting, except required tax payments, from an EEs check without their signed authorization.
  • Yes, we have specific authorization for premium deduction in the amount of $215 (regular premium payment) per payroll period. And I agree totally with you, which is exactly how I think we're relieved in this situation. We may have an angry employee who may give us a hard time and send a few of us home with a headache for a few days, but I think we're OK. We do not have a signed authorization to take more than $215 per payroll period. Had we taken more than $215, I'm 99.9% positive that we would not be OK right now. All I can think right now is that I must be walking in sunshine. With the payroll misunderstanding on my prior instruction to leave the net wage at minimum wage, my guess is that if there had been enough hours to take more than $215, we would have and I'd probably be sweating from more than a brisk walk at lunch time.
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