Direct Deposit/Termination

HRratrace

Hello!
I am a newbie, so please bear with me.
Our company recently established mandatory direct deposit for all employees. We have an employee who was recently terminated, but neglected to turn in his badge and uniforms as required.
Payroll was notified late of his termination, thus they have already processed his pay for this week. His direct deposit is scheduled to go into his account on Friday at 12:01am. This will be the final paycheck he receives from us.
Does the company have the authority to reverse his direct deposit so that we can collect the monies due to us for his badge and uniform? We have his signature and a permission form on file indicating that he has been informed that failure to return these items will result in him being charged accordingly...but I am uneasy giving the OK to reverse his direct deposit. In order for us to be able to collect the money due we would have to reverse his direct deposit and issue him a manual check.
Is this legal? What are our rights as a company and his rights as an employee?
Must make a decison today, so your prompt thoughts are much appreciated.
Thanks so much for your help...
KPS

LindaS

Does the authorization form he signed have a specific dollar amount? How old is the authorization? If this is a relatively new authorization (ie, within the past two years), and the exact dollar amount is listed on the form, I would go ahead and deduct the amount from the paycheck. Keep in mind, however, that he cannot go below minimum wage when taking your deduction. If you have "all your ducks in a row", you should be okay takin the amounts from his final check. If you don't, do NOT withhold the amount from his final check and seek restitution through other legal channels open to you.

Shadowfax

[font size="1" color="#FF0000"]LAST EDITED ON 11-13-03 AT 01:27PM (CST)[/font][br][br]You might check on this forum because we just went through all of this within the last month or so. I would not deduct. Im most instances the emp/er is in no better position than any other creditor so deduction is an extra judicial attachment of wages. If, you have a specific authorization, AND, if the deduct will not reduce wage below min, yo MIGHT have a position. I wouldn't risk it! Sorry, I forgot to say welcome!

Parabeagle

I feel better about the fact that he signed an authorization permitting you to do this, but please double check your state's wage and hour law. In some states, recouping such funds from a final paycheck is strictly forbidden and your only recourse is to sue for the $ in small claims court. Welcome to the Forum, by the way. You'll find lots of good advice and very few really scary people. x:-)

JudyT929

I have had to stop direct deposit and issue manual checks on termination numerous times and not had any problem. However, our employees sign a form when they set up direct deposit that gives us the authorization to not only deposit money in their account but also reverse the deposit in case of error: "I hereby authorize the XXX, hereinafter called COMPANY, to initiate credit entries to my checking and/or savings account(s) indicated above and the depository (ies) named above, hereinafter called DEPOSITORY to credit the same such account(s). The COMPANY is also authorized to initiate debit entries to adjust any payroll errors which it has caused to be made to my account(s)." If you have similar wording on your direct deposit authorization and it is signed by the employee I don't see a problem. If you don't have employees sign off on something like this you might want to start to avoid this problem in the future.

System

ABSOULUTELY!!! WE DO IT ALL THE TIME! YOU ARE WITHIN YOUR RIGHTS TO DO SO!

Pork

THE COMPANY HAS NO AUTHORITY TO DO ANYTHING BUT PAY THE EE HIS WAGES. I WOULD STOP HIS DIRECT DEPOSIT, AND MAKE THE EE PICK-UP HIS FINAL PAY CHECK FROM THE MANAGER, OR WHOEVER ISSUES PAY CHECKS IN YOUR COMPANY. Make sure you let him know what he owes back to the company and that he will be allowed to pick up his pay check as soon as he turns in company property or signs a letter telling you to take the cost of property out of his last paycheck. Make the final paycheck available to him sooner than Friday, if all is turned in or Friday at 5 PM.

PORK

marc

Welcome to the forum.

This is a topic that has been discussed several times. If you do a search on the topic, you will be able to review those threads for more discussion. That said, LindaS gave good advice. Reverse the direct deposit, deduct the dollars, and then reissue. Please be sure your authorization to do so is in good order. Specifically identifies the items and amounts, and do not pay below minimum wage, just as LindaS advised.

If your EE has not authorized you to pay him/her in another manner, you should go ahead and do another direct deposit. If that gives you a timing issue, call them and let them know the check is available and you can mail it or have them pick it up.

In my opinion, you cannot hold the paycheck hostage for a return of the items as suggested by others. You might be able to get away with it, but it is a violation of regulations.

In my state, if the ER requires uniforms and badges, they must pay for them, so you could not deduct these costs even if your policy said you could.