Withholding Final Check

Watson · July 2002

We are in TN performing a job that requires our workers to be badged. Our contract with our client states that we will not receive our final payment until all badges are returned. We have hired several employees for the duration of the job only. We need some way to ensure that we get their badges back when the job is over. Can we have them sign something stating that they understand that we will not give them their final paycheck until the badges are returned? We need something in place to get these back as it will mean several hundred thousand dollars if we don't!

Don D · July 2002

I don't know how it will fly with the law, but, we have a statement signed acknowledging that in order to receive any final paycheck the ee must return all company property and satisfy any financial obligations he/she has to the company and that unless paid or returned, the value will be deducted from final pay owed. Such as travel expense advances, badges, briefcase, laptop, loans and technical tool kits. We haven't been challenged, so it's only an assumption that we're legal.

denisek · July 2002

My understanding is that we cannot deduct business items from their payroll without the ee authorization and also cannot bring the employee below minimum wage when deducting. What we do for the items that need to be collected before they leave is to have it at the end of our exit interview. We have a checklist on benefits we need to discuss and items that need to be turned in. By doing this we receive company belongings back before an employee leaves.

Don D · July 2002

[font size="1" color="#FF0000"]LAST EDITED ON 07-18-02 AT 02:39PM (CST)[/font][p]I think that "without the ee's authorization" might be the key. The statement they acknowledge and agree to does authorize the withholding. The problem isn't the ones who hang around for orderly exit interviews. It's the ones who don't show up or quit over the phone, perhaps a remote salesman or an engineer who quit and didn't return a $1400 set of cable coring tools.

Watson · July 2002

Exactly Don. These are employees that quit without a word to us, just a no-call, no-show. I don't want to get their signed authorizations to withhold from their checks. I want to have them sign something that says they agree that they get their final check when they give us their badges. So if they quit without telling us, they won't get their check without coming back in. Any advice? Can it be done? Without some way to get these badges back, we can lose a lot of money!

LFernandes · July 2002

Can't you have them sign something when you issue the badges to them? I've also told terming employees that they must pick up their last check in person and bring any company property with them. If they abandon their job, I send this information via certified letter.

Don D · July 2002

I keep hearing this ringing in my ear that says, "A person cannot sign away his rights." It would seem that one of those rights is his entitlement to wages for hours worked. I'm not comfortable with the notion that a person can be required to pick up their pay in person or either they forfeit it. I think a policy like that could be challenged (where are the lawyers?).

LFernandes · July 2002

They don't forfeit they pay! If they don't pick it up, we send the check via the mail and just caulk the badges, uniforms, etc. as a loss. I just find people tend to return things when we ask them to pick up their last check.

Lori B · July 2002

You all raise good points. Keep in mind that this entire practice is illegal in most states if challenged. The last point is key. Most ees simply don't challenge it so everyone does it.

For ex, in Illinois, the ee has to sign the authorization to deduct/withhold pay, at the time the deduction is made. All those prior agreements are meaningless if the ee doesn't authorize it at the time the deduction is made. Of course, what ee in their right mind would agree to this at that time? How do you get an ee to authorize it if they walk, no call no show?

As a practical matter, employers never get that proper authorization. They withhold/deduct anyway. If the ee has an issue, they run file a wage file claim. It takes about 6 months for the state DOL to do anything with such a claim. Chances are, the ee has returned whatever property was at issue long before the 6 months. These situations resolve themselve without the legalities ever really becoming a meaningful issue. So, it is one of those areas where reality dicates that you can't always follow the law to a T. Assess your cost vs. risk and make the call for what is best for your organization.

Carol CA · July 2002

Definitely check your state law - it would be illegal in my state of California.

WOCO Frank · July 2002

It's water under the bridge, of course, but this contract clause is a good example of one of those things no one ever checks with HR before agreeing to.

On the other hand, I'm reminded of those eternal words of wisdom... "Badges? We don't need no steenking badges!"

TheCol · July 2002

I had a thought I haven't seen yet. How about a "badge deposit" in some amount ABOVE the reasonable value of the badge? Get it out of early paychecks, with permission. Final pay is thereby unencumbered and the deposit returned with the badge, of course.

bsa · July 2002

Keep the badges on-site, so they are left behind each day when they leave the job -- like a time card.

Rockie · July 2002

The bottom line is...(in South Carolina anyway) is that the employee WILL be paid wages for hours worked. You also have to pay them on the regularly scheduled payday. Their method of payment cannot be any different than any other employee. The only way you can delay payment of wages is that if the employee quits in the middle of a pay cycle - they have to wait until the next regularly scheduled payday.

As far as withholding for company properly, they would need to sign a payback agreement on the front end of employment authorizing you to do this. Keep in mind though, you cannot withhold a person's entire paycheck. If the amount brings them below the minimum wage, you can't do this.

I once worked for a hospital that offered all these huge signon bonuses for employees who agreed to stay for a period of time. We are talking about anywhere from $3-6,000. They had to agree to work for a specific period of time or had to pay back the entire signon. If they quit before that period of time was up, the hospital could not withhold their their entire pay. Sometimes they did this of course,but felt they were in "the right". If they withheld all of the first paycheck after notice (4 week notice), the employee simply quit in order to avoid paying the rest of the bonus. Your only recourse really, would be to take this person to court for non-payment. Most of the time this cost more than the amount owed, and the employees know all this. The bottom line comes down to whether they are an honorable person or not. Some people would really surprise you and make arrangements to pay back this bonus because it was the right thing to do. Unfortunately, these are few and far between.

This unfortunately is another case where the law isn't necessarily just when it comes to the employer.

Withholding Final Check

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