Holding a raise because an employee owes the company money

ndean24

I work for a service company and a few employees have had work done by our technicians at their homes.  We have sent them a bill and they have sent some money in but have not paid the bill in full.  Now the CFO wants to hold their raises (not increase their pay with everyone else) until they pay their outstanding bills.  Is that legal?

IT HR

Here is why I like to keep work and personal stuff completely seperate.  This is like a bank giving an employee a mortgage or loan and then trying to pull the money out of the persons paycheck to pay an outstanding amount.  The raise has nothing to do with the outstanding bill that the person has.  If he/she met the performance standards or criteria to receive the raise then he/she should get the raise.  If the person has not paid the bill and you have brought it to their attention then go through the same steps you do with a regular customer that is not paying the bill.   I would assume this would consist of sending out overdue invoices and ultimately sending to collections if need be. 

TXHRGuy

[quote user="ndean24"]

I work for a service company and a few employees have had work done by our technicians at their homes.  We have sent them a bill and they have sent some money in but have not paid the bill in full.  Now the CFO wants to hold their raises (not increase their pay with everyone else) until they pay their outstanding bills.  Is that legal?

[/quote]

Well, one side of me says, "That's not illegal, because no pay is being withheld.  Therefore, state payday and check deduction laws do not matter."  That part I think is pretty solid, although someone could argue that the plan is a de facto pay deduction, in which case, you could get in some hot water if you do not meet your state's requirements to make such a deduction (which will generally at least include an agreement to allow the deduction).

The other side of me wonders if the people with bill problems share some common personal characteristics that HR may be concerned about.

Better to send them a past due notice and indicate that it will be sent to collections if not paid promptly.

Generally, keep business and payroll separate.